Narrandera's Fisheries Hatchery and Research Centre will play a pivotal role in rescue efforts as warnings are sounded of a "potential fish Armageddon" this summer.
The $4 million expansion upgrade will see the construction of new buildings and the installation of high-tech equipment to significantly expand the centre's capacity to house native fish species.
Fisheries centre manager Martin Asmus said the expansion would help fish locally and across NSW, with the state-of-the-art hatchery able to restock affected areas when conditions improve.
Retrofitting the old hatchery would enable intensive production of threatened small-body fish, he said.
In February, the Narrandera centre took in Murray cod and other species including silver perch that had been stressed and in danger of falling victim to mass fish kills.
Currently, the state's largest ever fish rescue and restocking program is under way, with specialist teams embarking on a two-week operation in the Darling River at Menindee.
Minister for Agriculture Adam Marshall said the unprecedented action could provide a lifeline for key native species ahead of an expected summer of horror fish kills.
"We're staring down the barrel of a potential fish Armageddon, which is why we're wasting little time rolling out this unprecedented action," Mr Marshall said.
Below average rainfall during August has seen widespread drought conditions continue to affect regional NSW, according to the latest drought update from the state's Department of Primary Industries.
Currently, 95 per cent of NSW remains in one of the three drought categories, with the intensity of the drought high for much of the northern, central west and far west of the state.
The DPI's leader of climate applications Anthony Clark said this drought has now been going for 24 months or more in many parts of NSW resulting in failed cropping seasons, low water availability and stock feed deficits.
"Winter rainfall, a key time for hydrological and soil water recharge, was below average for much of NSW, which creates a challenging scenario for water resource managers, irrigators and dryland farming operations over the next six months," Dr Clark said.
The official Bureau of Meteorology forecast predicts the likelihood of above median rainfall is at 30 per cent or lower, for much of NSW.
For more drought-related information, visit droughthub.nsw.gov.au.