Exinfinitas and macgraw have been singled out as winners.
The two brands took out their respective heats in the regional final (Australia and New Zealand) of the International Woolmark Prize.
Exinfinitas was recognised for its menswear offer, with macgraw receiving the top gong for womenswear.
International judges for the local award included Jason Wu and Hugo Boss artistic director Richard Nicoll.
"The level of talent was really high,” Wu said.
“All of the designers showed a great balance of creativity and commercialisation, which is integral today."
Exinfinitas designer Lukas Vincent fused surf culture with tailoring in an innovative way, using wool in different weights and textures to offer a modern take on menswear.
“Lukas came with a sharp point of view, a plan, a unique use of wool - he really transformed the material and definitely stood out as the clear winner,” Wu said.
macgraw duo - Beth and Tessa MacGraw - showed a two-piece look made up of a wool overcoat with hand embroidered Merino wool flowers, and a wool dress.
“Their ability to present, to share their point of view, and the amount of stores they are already stocked in speaks lengths of their talent,” Wu continued.
“To the judging panel, they seemed the most ready to advance to the next stage.”
Both winners were awarded AU$50,000, plus the opportunity to represent Australian and New Zealand in the international final.
For the next six months, the winning designers will be required to develop a capsule collection in Merino wool.
The collection will be showcased at one of two events that will highlight the six menswear finalists and six womenswear finalists selected from across the globe.
The final for menswear will be held on schedule during London Collections Men and the womenswear final will be held in Paris, both in January 2017.
The winners of the menswear and womenswear global finals will receive a further AU$100,000 to assist with fabric sourcing and marketing of their collection, as well as mentoring from industry experts.
In addition, both international winners will have the opportunity to have their collection distributed through an international retail partner network.
The network includes Harvey Nichols in the UK, David Jones in Australia, Boutique 1 in the UAE, Verso in Belgium, LECLAIREUR in Paris, Boon the Shop in South Korea, The Papilion in Indonesia and online through mytheresa.com (womenswear) and MATCHESFASHION.COM (menswear).