Numbering 50,000, many are descendants of Holocaust survivors and refugees from eastern Europe who settled here in the 1930s and 1940s, and they live mostly in the city's inner south-east.
There they built a gamut of institutions: synagogues, schools, retirement homes as well as kosher restaurants and butchers.
The area is also home to a number of Jewish bakeries famous for making the best bagels in town and drool-worthy cakes based on age-old Polish, German and Hungarian recipes.
"The Jewish bakeries of Melbourne have strong traditions that hark back to homespun origins and offer a culinary link to the places many had fled to make new lives," says Damien Green, an author and educator at King David, a Jewish day school in Melbourne.
In 1931, Pearl Lavine, a Jewish migrant from Poland, opened the Monaco Cake Shop in central Melbourne. There she sold sweets like kooglhoupf, a layer cake infused with chocolate, and rugelach, cream cheese pastries filled with honey and nuts.
In 1934, Mrs Lavine moved to bayside suburb St Kilda to cater to the influx of Jewish migrants settling there.
But people came from all over the city to ogle at the colourful cakes displayed in the window of the rebranded Monarch Cake Shop.
The concept was so successful that three of her apprentices quit and opened their own cake shops on the same street.
Mrs Lavine has died but her legacy lives on under the watchful eyes of Gideon Markham, a Polish Jew who bought Monarch Cake Shop in 1996.
"Our cheesecake is still based on a 100-year-old recipe Mrs Lavine brought from Poland and it's still baked fresh on the premises every day using fermented quark cheese," he says.
Mr Markham's daughter, Nikki Laski, says in a fast-changing world, the absence of change gives Monarch its appeal.
"The young people in St Kilda have embraced this place because they feel they live in a word without substance, where everything is a contrived idea that some marketing guru made up," she says. "But this place is real. Nothing is manufactured."
About 20 minutes' walk from St Kilda, Carlisle St in the suburb of Balaclava is home to Glick's, a bakery founded in 1960 by Holocaust survivor Mendel Glick.
"My father was the first one in Australia to revive the old eastern European recipe for boiled bagels. They were an instant crowd-pleaser and began replacing other bread items in homes and cafes," says his daughter, Penina Levitan.
Mr Glick also came up with the idea of selling piping hot challah - braided egg loaf used on ceremonial occasions like the Sabbath and Jewish New Year (Rosh Hashanah).
"When we first brought them out people would line up around the corner on Fridays," Ms Levitan says.
There are now three more Glick's bakeries in Melbourne and two in Sydney. Mendel Glick continued to work at the original Carlisle St store until his death in 2017. He was 94.
"All my father's family was murdered in the Holocaust and he felt because God spared him, he would do whatever he could to succeed," Ms Levitan says.
"He had nine children and we don't even know how many grandchildren and great-grandchildren - probably more than 200. Even after we all pass away, people will still eat Glick's bagels."
One block from Glick's, Haymisha Bakery was established in 1979 by Zalmy Weisz, a son of Hungarian Holocaust survivor Flora Weisz.
Haymisha sell bagels and challahs but their specialities are kosher biscuits and cakes.
"My uncle Zalmy used to have a chocolate factory and a bakery," says store manager Hannah Fried.
"One day he made an experiment where he chocolate-coated horseshoe biscuits and it was a real hit. It's still one of our bestsellers"
The next generation
When Lichtenstein's Bakehouse opened across the road from Glick's in 2002, the objective was to offer the Jewish community something new.
"We started with kosher breads that no-one else had like country loaf that's 65% seeds, sourdough spelt bread and Turkish bread," says Moshe Lichtenstein.
In 2006, Lichtenstein's became the first kosher bakery in Australia to offer a gluten-free range.
"You can't really make gluten-free challah because you can't plaid the dough. The texture is too soft," he says. "So we do gluten-free rolls instead and gluten-free bagels. With the health food craze, it's become really popular."
King David's Damien Green adds: "That these traditional baked goods are in major supermarket chains shows the influence of Jewish bakers on the city itself and the widespread appeal of their craft."
Mr Green describes one of Melbourne's newest Jewish bakeries, Zeppelin Bakehouse in the affluent suburb Brighton, as "a fusion between older traditions and modern artisan bakeries".
Zeppelin Bakehouse is not a certified kosher business. But it draws heavily on the Jewish heritage of owner Terry Kallenbach, who sells challah on Fridays, Danish pastries with ricotta and the kind of rye bread favoured by many in eastern Europe.
"I didn't set out to open a Jewish bakery but I certainly feel lots of pride in the fact that our food and service has a basis in Jewish culture," he says.