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The bulky barnacle-encrusted cylinder was first spotted in mid-July near remote Jurien Bay, a coastal region two hours' drive north of Perth in Western Australia.
Amateur sleuths speculated online that the object might have a military origin or even be linked to the disappearance of Malaysian Airlines flight MH370.
But the Australian Space Agency said it had concluded the object was "most likely" debris from an "expended third-stage of a Polar Satellite Launch Vehicle".
The medium-lift launch vehicle is operated by the Indian Space Research Organisation, the agency added.
The object, which measures some two metres (six feet) high and has cables dangling from the top, is being kept in storage.
Meanwhile, officials from both countries are working together to "provide further confirmation to determine next steps, including considering obligations under the United Nations space treaties", the Australian Space Agency said.
It is not the first time Australia has found itself a landing ground for space junk -- last August, a sheep farmer in New South Wales found a charred chunk from one of Elon Musk's SpaceX missions jutting out of his paddock.
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