The Victorian government on Sunday unveiled the $14 million plan which includes $8.2 million for a career rescue scheme designed to support workers in at-risk industries.
While AI adoption is expected to boost productivity, there are widespread concerns the technology could also be used to eliminate many jobs.
"It's always the Labor way to make sure that workers are supported during times of transition (and) times when workers are seeing what they knew was their work being disrupted by outside forces," Premier Jacinta Allan said on Sunday.
"That is why we are focused on providing support both for workers who are being impacted but also looking at how we can provide training so workers of the future can be ready to work in an AI workforce."
The package seeks to fast-track at-risk employees to work in specialist AI and other technology roles before similar technology makes them redundant.
The head of Anthropic, the world's most valuable AI-focused startup, has said the technology could cause unemployment to spike by up to 20 per cent.
An ANU poll released in April found almost a third of Australians were concerned machines would replace them.
The survey was taken after local tech darling Atlassian axed 1600 jobs, including 500 in Australia, citing AI-caused changes in workforce needs.
The state government's move is expected to support more than 6200 Victorians to upskill.
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