The visual extravaganza in Australia's biggest city is already watched by more than a million people at Sydney Harbour and a further one billion via a television audience.
Organisers hope the live stream will be viewed by more than 10 million Facebook users around the world.
The announcement marks the latest push by the US social media giant to tap into live video as it competes with similar offerings from Twitter and Tumblr.
Some 90 per cent of visitors to Sydney during New Year's Eve say they travel to the harbour city specifically for the fireworks, according to a survey by research analyst group StollzNow.
Live video streaming has become a popular tool on social media in recent months with the launch of Twitter's Periscope last year and Facebook Live, which opened to all users earlier this year.