It is the first time since September 28 the daily case numbers have been below 1000 and follows 1471 new infections yesterday.
Nine people with the virus have died in the last 24 hours.
A crowd of up to 10,000 will be allowed to watch the race, after a spectator-free event last year.
But the usual festivities will still be impinged on by remaining restrictions.
Spectators will be separated into different seating zones and food and drinks will only be able to be served as part of table service.
The wearing of masks will also be mandatory.
Anybody opting to eschew the race track in favour of an at-home event will be able to have up to 10 people over, while up to 30 can gather outdoors.
Punters at the pub will have to abide by the one person per four square metre rule.
Victoria recorded 1471 new COVID-19 cases and four deaths yesterday as Melbourne Airport re-opened to returning Australians.
Crowds return to Flemington for first time since lockdown for Derby Day
Regular international flights have resumed into the Victorian capital, with no quarantine necessary for fully-vaccinated arrivals.
Domestic travel has also opened for Victorians to a degree, with fully vaccinated people now able to freely enter and return from New South Wales.