The prime minister says the nation's identity is strengthened by the stories and songs, dance and art, and the practices and ceremonies of First Australians.
"We honour their resilience and survival, respect and cherish their continuing contribution to our nation. It's a heritage of which we are proud and which we celebrate, it's uniquely Australian," he said in Canberra on Friday.
Australia Day Wugulora Morning Ceremony on the Walumil Lawns, Barangaroo. Source: AAP
"We haven't always recognised this truth as we should've done, but all of us, including our newest citizens, are heirs to this history, and it's our duty to learn, embrace, and help preserve it."
Welcoming a swag of migrants as Australian citizens, Mr Turnbull said the nation was united in its diversity.
"We do not define our national identity, as so many other nations do, by race, by religion, or by a particular culture, but by shared values," he said on the shores of Lake Burley Griffin on Friday.
"Our remarkable nation is the work of all of us and the generations that came before us. And by defending and sustaining our Australian values, we will forge an even brighter future for the generations that come after us."
Among the new migrants was Titi Macanan, a nurse who hails from Finland, who has just finished building a straw house with her husband.
"We're running a few sheep just in case we don't have enough in Australia," she joked after making the citizenship pledge.
Almost 13,000 people from 129 different nationalities are due to become Australian citizens in ceremonies across the country.
Prime Minister Malcolm Turnbull poses with new Australian citizens at an Australia Day Citizenship Ceremony and Flag Raising event in Canberra. Source: AAP
But not everybody will be celebrating the national holiday.
As disagreement intensifies over shifting the national day from the January 26 anniversary of the First Fleet's arrival in 1788, thousands are expected at "Invasion Day" marches around the country More than 5000 are expected at a rally outside the Victorian Parliament and similar numbers will walk in Sydney, starting from The Block in Redfern.
Protests have already begun with a Melbourne statue of Captain Cook daubed in pink paint and the words "No Pride" on Thursday.
However, not all Aboriginals are boycotting celebrations with indigenous performers including the Koomurri Aboriginal Dancers and the KARI Singers opening Friday's festivities in Sydney which is expecting a crowd of around half a million into the city.
NSW Governor David Hurley kicked off Australia Day celebrations in the state with a speech acknowledging the controversy surrounding the holiday to mark the arrival of the First Fleet in Sydney harbour.
While recognising the importance of Australia Day, the former army chief said Australians should listen to the wisdom of the world's oldest continuous living culture.
They should also try to understand the Aboriginal view of the 230 years since the British fleet landed and settled in Sydney.
"I'm proud of my country, its people and its achievements but I also want it to be better," the former army chief said in Sydney on Friday.
"To be informed about this past is not a threat, to be ignorant, though, is a risk to our national wellbeing.
"With a knowledge of our recent past and an understanding of our oldest culture, we can shape our future."
The governor was joined by NSW Premier Gladys Berejiklian and about a 1000 people at Barangaroo on the harbour under a grey sky for the indigenous WugulOra morning ceremony to mark Australia Day.
It included dancers, a smoking ceremony, the singing of the national anthem in English and Dharawal and the raising of the Australian flag next to an indigenous flag on the Sydney Harbour Bridge.
About half a million people are expected to flock to the harbour foreshores to celebrate Australia's national day, under the watchful eye of a boosted police presence.
Cockroach races in Queensland and native animal cook ups in the Northern Territory have become Australia Day staples, while hundreds of thousands of others will flock to various public events across all capital cities.
