Players will take boats up the Yarra River as part of the revamped AFL Grand Final parade

An artist's impression of how the AFL Grand Final parade will appear on its new route incorporating the Yarra River. (Supplied)

Melbourne's traditional AFL Grand Final parade will return after a two-year break, with a new route incorporating the Yarra River for the first time.

The parade was not held in Melbourne in 2020–21 as the COVID-19 pandemic forced the AFL Grand Finals in those years to be moved to Brisbane and Perth.

The AFL and the Victorian government have announced the revamped event is returning on September 23 as part of a four-day AFL festival.

As part of the new event, AFL players will travel by boat up the Yarra River from Southbank to Birrarung Marr, followed by a motorcade across William Barak Bridge to Yarra Park.

The Yarra Park precinct will host markets, food trucks, Auskick clinics and four AFLW games during the festival, from September 21–24.

AFL executive manager Kylie Rogers said fans of the sport were "starving" after having the parade cancelled the last two years.

"Footy and Melbourne have really bounced back after what's been an incredibly challenging two years and I have no doubt that Grand Final week will bring back the best of the football and the city of Melbourne together," she said.

Ms Rogers said having fans line the river bank for the parade would provide a different experience to previous years.

"We're just mixing it up. There's been five different parade routes over the years and after two years of not being able to have it in Melbourne we wanted to do things differently and really focus on family-friendly activations," she said.

The parade's new route will see players dropped off by boats at Birrarung Marr before continuing by vehicle to the MCG. (Supplied)

Victoria's Tourism, Sport and Major Events Minister, Steve Dimopoulos, said the government was expecting up to 300,000 people to attend the parade in the CBD.

"We know the value of it to fans, we appreciate the fans' commitment to the game over many years and particularly over the last couple of years and also it's a boost for business in the CBD and surrounds," he said.

The AFLW matches to be played during the four-day festival include the Western Bulldogs-Kangaroos, and Sydney Swans-Hawthorn clashes at Punt Road Oval on September 23, the Richmond-Brisbane Lions match at the same venue on September 24, and the match between Collingwood and Essendon at Olympic Park on September 23.