Foreign Minister Julie Bishop for the first time used powers under terrorism laws to declare Raqqa a no-go zone.
Anyone entering the area could face up to 10 years in prison unless they have a legitimate reason, including family visits, journalism or aid work.
Security officials estimate about 60 Australians are fighting with IS.
The new terrorism laws aimed to stop Australians from fighting with terror groups.
Ms Bishop told parliament she had "declared al-Raqqa province an area where a listed terrorist organisation is engaging in hostile activity".
She said she had also cancelled about 75 passports and had refused to issue another 10 "to stop extremists leaving Australia to fight in conflicts".
Australia passed anti-terror legislation in October amid concerns about possible attacks in Australia.
In September, hundreds of police carried out raids in Sydney and Brisbane over an alleged plot by Islamist extremists to carry out random killings in Australia.
Only one person was charged with terror offences.
Critics say the laws are too severe and reverse the onus of proof by forcing Australian citizens to prove their innocence.
But Prime Minister Tony Abbott has said that the extremist threat means that to keep Australians safe "the delicate balance between freedom and security may have to shift".
Australia has banned its citizens from travelling to the Syrian province of Raqqa, stronghold of the Islamic State (IS) militant group.