Mobile phone detection cameras will start targeting illegal phone use from Sunday, December 1.
A combination of fixed and transportable trailer-mounted cameras will be used across a network of locations statewide, to catch users "anywhere, anytime".
Warning letters will be issued for the first three months.
Following this period, the penalty for offending drivers is five demerit points and a $344 fine ($457 in a school zone).
The penalty increases to 10 demerit points during double-demerit periods.
It is the first time the system has been used anywhere in thee world.
"The detection system operates both day and night and in all weather conditions, using high-definition cameras to capture images of the front-row cabin space of all vehicles to detect illegal mobile phone use," Transport for NSW said.
"The system uses artificial intelligence to automatically review images and detect offending drivers, and to exclude images of non-offending drivers from further action.
"Images that the automated system considers likely to contain a driver illegally using a mobile phone are verified by authorised personnel.
"As with other road safety camera programs in NSW, strict controls are in place to ensure images captured by the system are securely stored and managed.
"While mobile phone detection cameras will be switched on and issuing warning letters from 1 December, NSW Police continue to enforce illegal mobile phone use and issue infringements as part of regular operations."
Earlier this year, when announcing the starting date, Transport Minister Andrew Constance denied the move was revenue raising and defended not having warning signs.
"We have to unfortunately use the element of surprise to get people to think 'well, I could get caught at any time'," he said.
"I want behaviour to change and I want it changed immediately.
"It's not about revenue - it's about saving lives."
Mr Constance said there was strong community support for more enforcement to stop illegal mobile phone use.
"Eighty per cent of people who were surveyed supported use of the mobile phone detection cameras," he said.