The two H models were in a fly-past ceremony at Richmond Air Base in Sydney.
The air force has been replacing the four-engine C-130H with the newer larger J variant.
Australia purchased 12 of the H-type aircraft in 1978 with Allison T56-A-15 engines to replace 12 earlier variant C-130A aircraft which had entered service in 1958.
The air force is phasing into service 12 C-130J aircraft, as well as six new C-17 Globemaster IIIs and 10 C-27J Spartans, the Defense Ministry said.
The C-130H Hercules has supported Australia's military ground operations in East Timor, Iraq and Afghanistan. It also provided peacetime and humanitarian service, including the evacuation of Australians from Cambodia in 1997 and at times of disaster and humanitarian assistance in Indonesia, Papua New Guinea and throughout the South Pacific.
The aircraft ferried Australian tourists injured in the 2002 bombings in Bali, Indonesia -- 88 Australians were among the 202 people who died in the nightclub explosions -- to Australia.
Four C-130Hs will be transferred to the Indonesian air force to support humanitarian assistance. Two C-130Hs will be kept by Australia's air force -- one aircraft going to the Air Force Museum at Point Cook Air Base and the other kept at Richmond Air Base for training purposes.
The Defense Department said it is investigating disposal options for the remaining aircraft.
The C-130 entered service with the United States in 1956, followed by Australia in 1958 and then other countries. In 2007, the C-130 joined the English Electric Canberra, Boeing B-52 Stratofortress, Tupolev Tu-95 and Boeing KC-135 to be in continuous active service for 50 years with the original customer.
The last major tactical exercise for Australia's C-130H was Exercise Pitch Black in August.
Both Hercules types, operated by 37 Squadron, were at Darwin Air Base for the exercise.
Detachment commander for the Hercules at Pitch Black, Squadron Leader Andrew Johnson, said he was proud have worked on one of the C-130H's final exercises.
"The C-130H has a long history of attending exercises like Pitch Black, both overseas and within Australia, as well as deploying on operations and humanitarian relief," Johnson said.
"Having been associated with the C-130H for so long I'm sad to see them going."
The exercise was an opportunity to transfer knowledge between the two Hercules crews.
"Pitch Black airspace is a high-threat environment, something which the C-130H crews are well-versed at flying in, and the C-130J crews are gradually being exposed to," Johnson said.
During the exercise, the crews attempted to evade enemy fighters and ground threats while they delivered vehicles and personnel waiting on a runway at Delamere Air Weapons Range Facility in the Outback.
"This was also an opportunity for our C-130H aircrew to capitalize on their experience with large formations of aircraft in a coalition environment before they move on to other aircraft types."