Descendants of the infamous bushranger, who was hanged at Old Melbourne Gaol in 1880 after he murdered three policemen, said they would lay Kelly to rest beside his mother Ellen in a private burial on Sunday.
Kelly's remains were thrown into a mass grave after his execution and discovered during renovations to the jail in 1929 when they were reburied inside Pentridge Prison, save his skull which remains missing.
Officially, their whereabouts had been a mystery until DNA testing in late 2011 on bones exhumed from the Pentridge site confirmed them to be Kelly's.
Redevelopers of the now-defunct prison wanted to reinter Kelly's remains at a museum or a memorial but the Victoria state government ordered that they be returned to the family last year.
Gary Dean, a Kelly historian and family friend, told AFP the outlaw would be formally farewelled at a Catholic service in the town of Wangaratta on Friday ahead of his burial in an unmarked grave.
Anthony Griffiths, the great-grandson of Kelly's sister Grace, said he expected a "fair percentage" of the outlaw's hundreds of descendants to attend the memorial, but stressed that it would not seek to glorify him.
"To us, it's just a family funeral service," Griffiths said.
The Kelly family said he would be interred at a small cemetery at the town of Greta near Glenrowan, the scene of his final gun battle with police, which he famously survived due to his home-made suit of armour and helmet.
"The descendants of the Kelly family wish to give effect to Ned Kelly's last wish and that he now be buried in consecrated ground with only his family in attendance in order to ensure a private, respectful and dignified funeral," the family told The Age newspaper.
"The family wish for their privacy to be respected so that they may farewell a very much loved member of their family."
Kelly's three accomplices, including younger brother Dan, were killed in the showdown at Glenrowan, ending an 18-month campaign that saw the so-called Kelly Gang become folk heroes for stealing from banks in country towns.
When they were confronted by police the gang was subject to an 8,000-pound bounty -- the largest reward ever offered in the British Empire at the time.
Relatives had disagreed on what should happen with Kelly's body, with some members of the family keen on the remains going on public display and others believing he should rest in peace.
The whereabouts of Kelly's skull have been the subject of controversy, with numerous people coming forward over the years to claim they have it -- most recently a self-proclaimed New Zealand witch who said she was given it in 1980.
Kelly, considered by some to be a cold-blooded killer, was also seen as a folk hero and symbol of Irish-Australian defiance against British authorities.
His exploits have been the subject of numerous films and television series.
Rolling Stones frontman Mick Jagger played the lead role in the 1970 movie "Ned Kelly", while Heath Ledger starred as the bandit in a 2003 remake.
Kelly has also been the inspiration for many books, most notably Peter Carey's novel "True History of the Kelly Gang", which won the 2001 Booker Prize.