Work will begin immediately on a new plan for the Melbourne Showgrounds.
Agriculture Minister Jaclyn Symes said the government would provide $1.5 million to the Royal Agricultural Society of Victoria (RASV) to develop the masterplan.
"The showgrounds are special for so many Victorians but they need a revamp - and today is the first step in that process," Ms Symes said.
"The showgrounds have evolved from the humble home of the Melbourne Show to one of Victoria's leading multi-use precincts.
"We need to bring its buildings, facilities and infrastructure into the 21st century."
RASV chief executive Paul Guerra said there was tremendous potential for the showgrounds to make an even bigger contribution to Victorian life, in tourism, agriculture, entertainment, education and so much more."
The Showgrounds has hosted the Royal Melbourne Show since 1883.
Since then it has grown into a truly multi-use space for events, exhibitions, music festivals, exams and competitions.
Ms Symes said despite this growth, infrastructure haf not kept up with the new and changing uses for the precinct.
The masterplan, which will be completed over the next 12 months, will identify how the site can be improved to maximise its potential as a centre for agriculture, events, exhibitions and wider community use.
It will look at options to upgrade or replace ageing infrastructure and how to best integrate transport, exhibition, and accommodation facilities into the precinct.
As part of the masterplan, show lovers, local residents and the wider community will be invited to contribute ideas at community consultation sessions.
Victorians will gain a glimpse into the future of the Showgrounds when the new Victoria Pavilion opens in August.
The pavilion will host Global Table in September - the biggest food, beverage and agribusiness event ever staged in Australia.
RASV events including the Royal Melbourne Show attract about 500,000 people each year and generate an estimated $400 million in economic benefit for Victoria.
The Show opens on September 21.
