Nitin Garg, who migrated from Punjab, was attacked in a park when he was walking towards fast-food joint Hungry Jack's, where he worked part-time.
He staggered into the restaurant on the corner of Somerville Road and Geelong Road, West Footscray, about 10 pm local time Saturday night (0330 hrs IST Sunday) and pleaded for help before collapsing.
He was taken to the Royal Melbourne Hospital but later died, according to TV reports.
The police said the youth from Newport had travelled to Yarraville train station about 9.30 pm local time (0300 hrs IST), then walked along Anderson Street to Cruickshank Park, where he was stabbed in the abdomen.
He managed to stumble some 300 metres to Hungry Jack's restaurant.
Homicide Squad Senior Sergeant Dave Snare described it as a vicious attack. He said at this stage there was no known motive and there was no evidence the youth was targeted because of his race.
"I think to draw any conclusion as to the motive may interfere with the investigation and would be presumptuous at this stage," he said.
The police were trying to contact relatives of the victim, a single man who had permanent residency in Australia, abroad to determine if he had any family in Australia.
Nearly 100 cases of attacks on Indians had been reported in Australia in 2009 as against 17 incidents of assaults in 2008.
Garg, who is the first Indian to be attacked this year, is the first victim of such assaults to succumb to his injuries.
His friends said he feared for his safety following a previous attack, local media reported, without mentioning when it had happened.
His housemate, Parminder Singh, said his friend was nervous after being beaten up by a group of men at the Newport railway station.
"They were just drunk and they wanted to find anyone to beat," Singh was quoted as saying by ABC News. "If they find someone alone they just beat (them) because they know nothing is going to happen after that.
"What will happen now? The police will not do anything, they will just take them to the jail or just let them sit there, they will give them food and all facilities so they're not scared of anything."
Senior Sergeant Snare said the police had not found a weapon yet. "We've had forensic out at examining the scene out at Hungry Jack's and in the park and also, with the assistance of the SES (State Emergency Service), we've done a line search through the park area," he said.
The police were awaiting the results of a post-mortem examination on the victim.
Sen Sgt Snare said at this stage the police had no leads and urged witnesses to come forward.
"We'd appeal for any witnesses around the area of Cruickshank Park, the residences there and people around Anderson Street and the railway station who saw any suspicious activity," he was quoted as saying by Australian Associated Press.
The police particularly wanted to hear from a group of people in the park earlier that night. They said there was no suggestion these people were involved in the attack, but they could help the investigation.Some of the victim's belongings were found in the park and the police has asked locals to report anything they might find.