Taxis drove at 5km/h (3mph) on the Tullamarine Freeway to Parliament House during the morning rush hour, causing a traffic jam.
The state government is planning industry reforms that will regulate ride-sharing app Uber and scrap taxi licenses.
Drivers are concerned they will not receive enough compensation.
Traditional taxis operate under rigid regulation and have to pay big sums for licences to drive passengers.
Last August, the state government legalised ride-sharing apps sparking a drop in the value of taxi operating licenses.
The licences were worth up to A$275,000 (£170,000; $210,000) each in 2015 and fell to about $150,000 last year.
Victoria's state government has offered owners A$100,000 to buy back their first licence and A$50,000 for subsequent licences, as part of planned industry reform that will scrap the license system.
Taxi driver Vasilos Spanos said the current offer would financially ruin his family.
"It cost me altogether for the three licences more than A$800,000," he told the Australian Broadcasting Corp.
Ari Angelopoulos owns two taxi licences and said he has lost more than 30% of his daily income.
"I work hard, I have two children, and I am the only worker in my family," he told Australian Associated Press. "I didn't come to Australia to be a slave."
Victoria's Public Transport Minister said the drivers were entitled to protest but described their behaviour as "irresponsible".
"It's not actually bringing people to their cause - it's driving them away," she told radio station 3AW.
Uber launched in 2009, has more than one million drivers and operates in more than 500 cities across 80 countries.