Eight of the 19 movies in contention for the top feature film honour have been made by female directors, more than in any other year, and pictures on the shortlist include Jane Campion's Bright Star, Rachel Perkins' Aboriginal musical Bran Nue Dae, and Daina Reid's romantic comedy, I Love You Too.
Other leading nominees include Peter Spierig's vampire movie Daybreakers, and father-and-son tale The Boys Are Back, directed by Scott Hicks.
AFI Chief Executive Damian Trewhella insists Kathryn Bigelow's historic Best Director win at the 2010 Oscars has paved the way for strong female representation in the film industry.
He says, "Rachel Perkins has got the hit of the year on her hands thus far with Bran Nue Dae, and Jane Campion has got a lot of recognition globally for Bright Star. In an international industry where women are still significantly under-represented, Australia is heading in the right direction."
AFI-nominated directed Perkins adds, "We've had an industry that's really worked to find a place for women. We're far more advanced than the industry in the States in that regard. I think the arts is pretty progressive in that way."
The 2010 AFI awards will be handed out in Melbourne, Australia in December.