Melbourne and Docklands Stadium were selected after the Victorian Government reportedly made a strong commitment to hosting the qualifier.
The Socceroos travel plans also proved a major factor, with the team scheduled to face Saudi Arabia away on 6 October.
Coach Ange Postecoglou was confident Melbourne would provide the team with the best opportunity for success in what is set to be one of the most difficult periods of the 2018 World Cup qualifying campaign.
"The October window is a challenging window in this qualification period as we have a match in Saudi Arabia on October 6 and then have a quick turn around to face Japan back in Australia," Postecoglou said.
"They are important games and this gives us the best chance of preparing for the two challenges we face within five days."
FFA CEO David Gallop was delighted with the decision, after taking into account both commercial and footballing factors.
"We are excited to have locked in Docklands Stadium in Melbourne for the Caltex Socceroos’ crucial World Cup Qualifier against Japan in October," Gallop said.
"The interest from State Governments all over Australia was high and a good indication of the popularity of the Caltex Socceroos. The Australia v Japan World Cup Qualifier will be a fantastic event and we are thrilled to be able to bring it to Melbourne.
"I’d like to thank the Victorian Government and Docklands Stadium for their support of the match and we look forward to seeing Docklands Stadium packed with fans and an atmosphere only football can provide with thousands of Japanese fans expected to be amongst the sea of green and gold."
FFA has also reaffirmed its long term agreement with the New South Wales Government with at least one of the remaining World Cup Qualifiers to be played in NSW over the next 12 months.
"FFA and the NSW Government have a strong long-term relationship that we announced before the Socceroos played Jordan and Greece in Sydney earlier this year and we look forward to playing premium Socceroos and Matildas matches in NSW over the next five years," Gallop said.
