In a statement, Nokia said the facility would be built at the UTS Tech Lab campus in Sydney.
The Innovation Lab will be used for testing new 5G use cases with real world applications. It will also serve as a location for new research opportunities.
Ray Kirby, associate professor, director of UTS Tech Lab, said: "UTS Tech Lab is a unique facility that supports collaboration with industry on research and development projects, such as this partnership with Nokia, which will drive innovation and growth in 5G and 6G network infrastructure.
Robert Joyce, chief technology officer at Nokia Oceania, said: "We are pleased to collaborate with UTS on this exciting 5G adventure.
"This partnership builds upon the existing innovative facilities at the university's Tech Lab and will enable researchers to develop, test and demonstrate innovative uses of 5G here in Australia.
"We are already exploring some exciting 5G use cases unique to Australia and look forward to demonstrating these soon."
The project will be used to test 5G and 6G technologies for industrial automation, agriculture and human-robot interactions.