All players and staff at the tournament must be vaccinated or have an exemption granted by an expert independent panel.
Djokovic, a nine-time Australian Open winner, has not spoken publicly about his vaccination status.
The tournament begins in Melbourne on 17 January.
"I've spent fantastic quality time with my loved ones over the break and today I'm heading down under with an exemption permission," the 34-year-old said on Instagram on Tuesday. "Let's go 2022.
"I am ready to live and breathe tennis in the next few weeks of competition."
The news was confirmed by tournament organisers Tennis Australia, who said: "Novak Djokovic will compete at the Australian Open and is on his way to Australia."
Earlier this week, Australian Open chief Craig Tiley said that some unvaccinated players had been granted exemptions to play in the year's first Grand Slam.
Applications for medical exemptions are being assessed anonymously by two separate panels, with inflammatory cardiac illness or another acute condition listed as valid reasons.
But it is also possible Djokovic has recently tested positive for the virus, which would allow him to defer taking the vaccine.
Tennis Australia said Djokovic was granted an exemption after a "a rigorous review process involving two separate independent panels of medical experts".
"Fair and independent protocols were established for assessing medical exemption applications that will enable us to ensure Australian Open 2022 is safe and enjoyable for everyone," said Tiley in a statement on Tuesday.
"Central to this process was that the decisions were made by independent medical experts and that every applicant was given due consideration."
Djokovic had pulled out of the Serbia team for the ATP Cup in Sydney, which had raised doubts over his participation at Melbourne Park.
BBC tennis commentator Andrew Castle said, while he was "not surprised" by the reaction to the exemption, the decision was "not unfair".
"We don't know what Djokovic's medical exemption is and we'll never know because it's private," Castle told BBC Radio 5 Live.
"But he must have one. We knew this would happen when exemptions were announced. I'm not surprised [by the reaction] but what I will say is, it's not unfair because he satisfied two independent panels.