The city is battling to contain an outbreak of the highly infectious Delta variant.
Officials reported 17 new cases on Friday, taking the cluster to 65 cases.
It is the first lockdown in Australia's largest city - home to 5.3 million people - this year.
It will affect the city centre, inner-city suburbs, as well as beachside suburbs in the east.
"We don't want to see this situation linger for weeks. We would like to see this situation end sooner rather than later," said New South Wales Premier Gladys Berejiklian.