Underbelly picked up an impressive eight nods at the nominations announcement at the Sydney Theatre on Wednesday, stealing the show from traditional film entries.
Cast including Vince Colosimo, Gyton Grantley, Damian Walshe-Howling, Kat Stewart and Madeleine West are all up for gongs, while the Nine Network series is favourite to win best TV drama series against City Homicide, Rush and Satisfaction.
Colosimo, Grantley and Walshe-Howling were swamped by media after the announcement.
"It's a testament to what a great show it was," said Grantley, who is up for best lead actor in a TV series.
"I'm really excited, I'm thrilled ... I think Underbelly stands out by far."
Underbelly's director Peter Andrikidis and screenwriter Peter Gawler have also been recognised.
Colosimo said "it was great fun" to be part of it despite only appearing in two episodes.
Stephen Curry, who will host the ceremony, joked that Robert Mammone, who played Tony Mokbel, should have been nominated for best pixilated face.
In the more traditional categories, the Black Balloon, starring Rhys Wakefield, Toni Collette and Gemma Ward, leads the field with 11 nominations, followed closely by romance thriller Unfinished Sky, starring William McInnes, with 10.
Both movies will face off in the best film category, along with thrillers The Jammed and The Square, which received seven nominations each.
Colosimo said he hoped Joel and Nash Edgerton would be recognised for the Square.
"Hopefully, they win one or two awards it would be great for them," Colosimo told AAP.
Curry said he hoped McInnes would win an AFI for his role in Unfinished Sky playing a farmer who takes in an Afghan woman after she flees an outback brothel.
"He is astonishing," he said.
For the Black Balloon, the AFI nominations follow a number of accolades, including a Crystal Bear award at the Berlin Film Festival.
The coming of age story about a family dealing with an autistic son is a semi-autobiographical movie by first-time feature film director Elissa Down.
In other categories, Wakefield will compete against McInnes, Guy Pearce and David Roberts for best lead actor.
Noni Hazlehurst (Bitter and Twisted), Monic Hendrickx (Unfinished Sky), and Emma Lung and Veronica Sywak, both from The Jammed, are nominated in the best lead actress category.
Among those nominated for the international AFI award are Heath Ledger for the Dark Knight, Eric Bana for The Other Boleyn Girl and Nicole Kidman and Cate Blanchett.
The 50th anniversary AFI celebration will be held at Melbourne's Princess Theatre on Saturday, December 6.
