A magnitude-3.9 earthquake was recorded at Ensay, in eastern Victoria, on Saturday night.
Residents say the earthquake shook their homes.
An expert says that aftershocks may be felt in the coming weeks.
A magnitude-3.9 earthquake in Victoria's High Country is the most powerful recorded in the area in more than a decade.
The earthquake's epicentre was recorded near Ensay, about 350 kilometres east of Melbourne, about 9:30pm on Saturday.
Geosciences Australia has received 346 reports from people who felt the earthquake.
Residents in the neighbouring town of Swifts Creek said the earthquake shook their houses.
"I actually thought, holy hell, that was a bloody a gumtree or something that landed right behind the house," Swifts Creek resident Stephen Richardson said.
"And then I thought, no, there was nothing near my house that could do that.
"It was a big thump beside the house and then I ran to the back door and heard it rumble up the valley."
He said the rumble sounded like a "massive bit of machinery was driving up the highway towards Omeo".
Swifts Creek resident Ray Gallagher said the earthquake "felt different to anything else I'd ever felt before".
"Our house is on a concrete floor, but it rattled the joint and you could hear the glass going," Mr Gallagher said.
"One thing we did think, because it was stormy, [was that] maybe lightning had hit a tree nearby."
Geosciences Australia senior seismologist Jonathan Griffin said the organisation had recorded 27 earthquakes within 100 kilometres of Ensay in the past decade.
But he said Saturday's earthquake was the most powerful.
"We wouldn't say it's particularly big, but it's not tiny either," Dr Griffin said.
"If you happen to be close to it, it would have given you a decent shake."
He said the earthquake occurred as a result of Australia's position at the centre of a tectonic plate which was moving about 7 centimetres a year.
"Because of that movement, it's getting squeezed and compressed from the forces at the plate boundaries," Mr Griffin said.
The stresses from that movement occasionally cause earthquakes in south-eastern Australia.
He said aftershocks were possible in the coming days and weeks.
"We can't predict earthquakes, so we never know and you can never rule out the possibility of getting a larger one as well," Dr Griffin said.