The reef will be gill net-free by mid-2027 under the $160 million licence buyout plan unveiled by the federal and Queensland state governments.
Dugongs, turtles, dolphins and sharks are among the species inadvertently caught and killed in the nets, which are already banned from use on parts of the reef.
Commercial fishers will also be prevented from taking threatened hammerhead sharks within Queensland waters.
"We know one of the most immediate threats to health of the reef is unsustainable fishing practices," Federal Environment Minister Tanya Plibersek said on Monday.
"The removal of gillnets in net-free zones on the reef has already helped boost local fish populations.
"We want to see this happen right across the reef."
Additional protected zones will be established in the Gulf of Carpentaria as part of plans to create a "net-free north" from Cape Bedford to Cape York.
Queensland Fisheries Minister Mark Furner said transitioning to more sustainable fishing practices would ensure the industry's long-term viability.
"This is an investment in the future of the reef and a more sustainable future for its commercial fishing industry," he said.
"Protecting good jobs in the fishing industry is crucial for the livelihoods of thousands of Queenslanders who depend on the state's seafood supply chain."
World Wide Fund for Nature-Australia praised the decision after having waged a lengthy campaign against the use of the nets.
"This announcement is shaping up as a globally significant moment for ocean conservation, fisheries management and the Great Barrier Reef," chief executive Dermot O'Gorman said.
"If all goes to plan, by June 2027 we'll have a net-free reef where dugongs, turtles, dolphins and other threatened species can swim without the threat of becoming entangled and drowning in a gill net, and that's a cause for global celebration."
A "long overdue" commitment to introduce legislation mandating the use of independent data validation on commercial fishing vessels was also welcomed.
"It means we'll have a much better understanding of what's happening out on the water, including how many threatened species are being accidentally caught," WWF-Australia's head of oceans Richard Leck said.
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