Thousands of mourners attended the funeral during the night of Aiia Maasarwe in his hometown of Baqa al-Gharbiya in northern Israel.
A week after she was killed after getting off a tram near the University of La Trobe in Bundoora, the 21-year-old was buried in her hometown, one hour north of Tel Aviv.
Thousands of mourners crammed out of the Maasarwe family home for a traditional Muslim burial in the predominantly Arab city of Baqa al-Gharbiyye.
Friends and neighbors carried flowers and Arabic signs, reading "Your beautiful soul will not be forgotten". They crowded together and prayed as their family lowered Maasarwe's coffin to the ground.
"She was a special girl from all aspects, it's very difficult to describe her with words," said her uncle, Jamil Maasarwe.
His family said Maasarwe had decided to study in Australia because of his reputation for safety.
"I mean, that's amazing, how could something like that happen to Aiia?" Said a cousin, Baker Maasarwe.
"Even though he is not with us, his voice must remain alive," he told AAP Sharef Maasarwe, his cousin.
"Aiia was a person full of life, energy, optimism."
After arriving from Australia, her coffin was moved to the local mosque, where prayers were held for her.
The cars got stuck in the streets, many with black flags. A sign outside the mosque read: "Violence is the language of the disgusting" in Arabic.
After the prayers, the coffin of Maasarwe was carried out by close members of the family wrapped in a silver cloth and lowered to the ground just after 11 a.m. local time.
The only sound that could be heard was from the Muslim prayers of the speakers. Young people marching in a procession raised black banners saying "It's time to say: no more massacres of women" and "women have the right to live in peace," in both Arabic and English.
A crowd of mourners followed Maasarwe's coffin when she was taken to the Al-Sarat mosque and the cemetery, where she was put to rest.
Hours earlier, the mayor of the city, Khaled Abu Mukh, and the Arab deputy Ahmad Tibi accompanied Maasarwe's father when his coffin arrived at the airport.
In a video posted on social media, Tibi said Maasarwe was now the daughter of all Arab Israelis.
Previously, while making her last trip home, a small vigil was held near the place where she was killed, with plans to plant a memorial tree and discover a plaque on the site.
The death of Ms. Maasarwe is the second time in seven months that a young woman was killed on her way home at night in Melbourne, which generated outrage among the community.
A pizzeria in Coburg North has offered to be a "safe haven" if women believe they are in danger, saying that anyone who is in danger, is being followed or attacked, can enter the store and tell staff they will notify police.
"If someone feels insecure, he's more than welcome to stay inside until he's comfortable and comfortable leaving," Newlands Pizza said in a Facebook post that has been shared more than 1,000 times.
The owner of the store, Faouzi Daghistani, says he came up with the idea after the murder of Ms. Maasarwe.
"After all the news came out last Friday, a lady came here. She sat here for about 90 minutes. I just had the feeling that something was not quite right. She kept looking out.
"I realized that maybe something was happening that she did not want to talk about, she was scared, she wanted a safe place to enter.
"That's the reason why I decided to put the message to inform people in this area if you feel unsafe, if you feel insecure or if there is a danger, feel free to come in and let us know."
Codey Herrmann, 20, has been charged with rape and murder of Ms. Maasarwe.