The $8 million machine, unveiled at Melbourne's Peter MacCallum Cancer Foundation on Tuesday, uses gamma rays to deliver a precise dose of radiation in the brain.

This allows it to kill cancer cells and shrink tumours while avoiding damage to healthy brain tissue.

The first patients could be treated with the gamma knife as soon as February, with the equipment able to help up to 500 people per year.

Peter MacCallum gamma knife service lead clinician Dr Claire Phillips said the treatment, known as stereotactic radiosurgery, was "completely non-invasive", with patients able to go straight home afterwards.

Peter MacCallum chief executive Dr Shelley Dolan said the gamma knife's installation in a basement-level radiotherapy bunker was a significant undertaking that required the removal and subsequent addition of almost 100 tonnes of concrete.

"Our patients deserve the very best care and the addition of the gamma knife to the array of world class cancer treatments available here at Peter Mac is a very important milestone," Dr Dolan said in a statement.

Victorian Health Minister Martin Foley said gamma knife radiosurgery was the "gold standard" for both adults and children with brain tumours.

"The gamma knife is set to save the lives of patients with hard-to-reach tumours, where other treatments may not have been able to be safely carried out," he said.

Mr Foley said the device could also provide new treatment options for a range of other non-cancerous conditions, such as painful trigeminal neuralgia, cranial vascular disorders, epilepsy and Parkinson's disease.

The Peter MacCallum Cancer Foundation's gamma knife was equally co-funded by the Victorian government and donors to the institution.

Australian Associated Press