The Department of Foreign Affairs said the Consulate-General in Lae, led by Paul Murphy, would "bolster the growing economic partnership" between Australia and PNG.
"It will assist the Australian government in building even stronger links with the many Australian businesses operating in this growing part of Papua New Guinea, including in mining, agriculture, manufacturing and retail.
"This new post will enable us to better support our development partnership with Papua New Guinea and to provide consular and passport services to Australians living and working in Lae and the surrounding region.
"The Consulate-General will also support Australia's defence and police partnerships in Lae. The establishment of the Lae Consulate-General continues the single largest expansion of Australia's diplomatic network in 40 years, with nine additional posts announced since 2013," the Department of Foreign Affairs said.
Lae is Papua New Guinea's second largest commercial centre and a gateway to the dynamic economies of Asia and the Pacific.