To improve the town's centre and safety for pedestrians, Moruya is the first to adopt a 30km/h speed limit on the South Coast.
Speed zones along Shore and Ford streets will drop permanently from 50km/h to 30km/h.
A Transport for NSW spokesperson said the new speed limit will make it safer for pedestrians to shop and enjoy the town, particularly during the upcoming summer holidays.
"Australian and international research shows vehicles travelling at 30km/h as opposed to 40km/h will stop eight metres earlier," the spokesperson said.
"If a collision did take place between a vehicle and pedestrian the risk of it being a fatality is slashed to 10 per cent at this lower speed."
The spokesperson said the new speed will come into effect on Monday, November 1.
Eurobodalla Shire Council has been advocating for the change along with the support of police, the local traffic committee and the community.
The new speed limit will make a walk to the Moruya waterfront or markets at Riverside Park an easier, more leisurely experience, says the spokesperson.
Eurobodalla Shire's director of infrastructure services, Warren Sharpe OAM, said the council has been proactive in shifting the focus to foot traffic in the town centre.
"We wanted to bring about a positive change within the Moruya CBD to make the town safer and more walkable," Mr Sharpe said.
"After discussion with the Moruya Chamber, we've implemented simple, cost effective pedestrian and vehicle slow points to produce a slower and safer environment for our community.
"We're really pleased that Transport for NSW has decided to make Moruya the first regional town to adopt the 30 km/h speed zone.
"After being financially slammed by the black summer bushfires and then COVID-19, being more accessible to visitors as they browse in the CBD and enjoy the waterfront will be huge benefit to small businesses that have been crying out for those tourist dollars."
He said the reduced speed zone will contribute to the Princes Highway upgrades commitment to improving the safety, liveability and economic sustainability of towns connected to the highway, including plans for a proposed Moruya bypass.
It would also complement Eurobodalla Shire Council's other recent work to improve pedestrian safety in Moruya's town centre, including raised pedestrian crossings on Ford Street and a roundabout at the Ford Lane intersection.