Under current laws, codeine can be obtained in compound form in over-the-counter painkillers and cough medicines.
But Australia's drug regulator believes the risk of addiction is too great.
The decision brings Australia into line with most developed countries in requiring a prescription for the opioid-based medication.
The US, most of Europe, Hong Kong and Japan have stopped the sale of over-the-counter codeine products.
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Australia's Therapeutic Drugs Administration (TGA) said consumers often became addicted to the drug.
"Misuse of over-the-counter codeine products contributes to severe health outcomes including liver damage, stomach ulceration, respiratory depression and death," it said in a statement.
The new rules will begin on 1 February 2018.
The TGA recommended patients discuss new treatment plans with their doctors, including whether to use painkilling alternatives such as paracetamol or ibuprofen.
Painkillers containing codeine will require a prescription in Australia from 2018 amid concerns over misuse.