Borealis on the Lake will run for 31 nights every Thursday to Sunday from July 15 to September 4.

The vivid sound-and-light show - created with mist-making machines and lasers - is the brainchild of Dan Acher, a Swiss artist who has taken the show to Lausanne, Tokyo, Korea, London - and earlier this year, the Adelaide Fringe Festival.

"We're hoping to get a few thousand people a night, so if you multiply that by the $400 average each overnight visitor spends, then we're looking at millions of dollars injected into the region," Daylesford and Macedon Ranges Tourism Chief Executive Steve Wroe said.

"This installation and the visitors it'll bring is much-needed after the turmoil of COVID.

"Aside from that, it really showcases Daylesford as one of our most beautiful tourism spots."

The circuit path around Lake Daylesford will be open during the day, but the south-west section will be fenced off each night of the show.

Other news: Monash Rural Health doctor in Bendigo joins prestigious fellowship

The entry point will be next to the Boathouse Cafe, which has been encouraged to capitalise on the late night crowds.

Mr Wroe said the first issue they had to work through was the impact on wildlife.

"We checked it out straight away - and Hepburn Council engaged a biodiversity consultant. Their report found there would be no meaningful impact on birdlife or other fauna," he said.

"For people living around the lake, the laser effects will be happening just a few feet above the water level.

"People might be able to see some of it from outside their homes, but it won't shine through their windows when they're trying to sleep at night."

Composer Guillaume Desbois has also created the installation's calming synthesizer music.

Artist Dan Acher's website describes him as an international activist who "uses cities as playgrounds to create a sense of belonging and community (and) his installations create spaces where strangers come together and connect beyond their differences."

The Victorian-first light show is one of almost 300 projects funded via the Andrews Government's Regional Events Fund over the last six years.

Read more: Historic mining township near Maldon strikes gold with $1.7m in tourism funding

Tourism Minister Martin Pakula said visitors to the installation would have the chance to experience all that the region had to offer - including local food and wine, natural springs and day spas, art galleries and shopping.

"We proudly back events like Borealis on the Lake because that encourages people to visit regional Victoria, which supports local businesses and creates jobs," he said.

"It'll be a unique and captivating event which is sure to attract visitors from far and wide."

Mr Wroe said Borealis would have staggered entry times, but ticketholders could stay as long as they liked.

"Some could stay for half an hour, others like to be there for an hour-and-a-half - it's totally up to them," he said.

"I'm confident this'll bring a lot of people to the region. We're hoping to perhaps make this an annual event."

Night one on July 15 coincides with the 2022 Winter Sounds Daylesford Music Festival (July 15-17).

Our journalists work hard to provide local, up-to-date news to the community. This is how you can access our trusted content: