The drone was "hovering in the vicinity of a prison" in Melbourne on Sunday afternoon, police said in a statement.
The drone appeared to have "four engines" and was carrying "a small quantity of drugs", police added.
The man has been charged with possessing a drug of dependence and attempting to commit an indictable offence.
He has been bailed and will appear in court next week, police say.
Drones, also known as unmanned aerial vehicles (UAVs), have been used in prison smuggling attempts in the past.
In November four people were arrested after a remote-controlled helicopter was allegedly used to fly tobacco into Calhoun state prison, Georgia, in the US.
Also in November, a drone was spotted flying over a prison in Quebec in Canada.
Australia's parliament recently held a roundtable on drones and privacy.
During the roundtable, Brad Mason, secretary of the Australian Certified UAV Operators Association, said there was "a lot of illegal and unauthorised use of UAVs.
"We understand that the regulator is doing its best to try and combat that but, unfortunately... they are so easily available and so cheap to buy these days that anybody can buy one and anyone can go out and operate one."
A man has been arrested for allegedly trying to smuggle drugs into a prison using a drone, Australian police say.