The renowned music promoter and record label founder died suddenly this week.
Mr Andrews today said a state funeral at an "iconic" venue would be appropriate to honour the legendary Victorian.
"I think it's appropriate that we get somewhere iconic that we can come together and celebrate his life," he said.
The premier extended his "deepest sympathies" to his widow Sue and his children.
"He was a good friend of mine, he was a great Victorian, he'll be missed," Mr Andrews said.
The 68-year-old founded the Mushroom Group in 1972 at just 20 years old, which flourished into Australia's largest independent entertainment group.
His touring company Frontier Touring is Australia's leading promoter, bringing out the biggest names in global music since its inception in 1979.
"The much-loved Australian music legend died peacefully in his sleep at his home in Melbourne, Australia," Mushroom Group said in a statement.
"Michael Gudinski was a key figure in shaping the Australian music industry.
"A larger-than-life figure, Michael was widely respected for his unwavering passion for all music – in particular Australian music."
Tributes have flowed online for Gudinksi, with many remembering the Australian icon as the "heart and soul" of the country's music industry.
"Today the heart of Australian music was ripped out. I felt it, my family felt it, the music business felt it, the world felt it. Michael Gudinski was not only that heart but he was my friend," rockstar Jimmy Barnes wrote in a series of tweets.
"He stood with me through my darkest moments and my most joyous days.
"Michael was the rock I reached for when life tried to wash me away. He never closed his door or his heart to me and my family. But I wasn't the only one who felt like Michael was there for me."
Actor Russell Crowe on Twitter said: "I'm going to miss him deeply".
British pop singer Ed Sheeran posted a poignant photo of himself with Gudinski against a sunset on Instagram, with the caption: "I'll miss you, mate".
Gudinski won multiple industry awards and was given a Member of the Order of Australia medal in 2006 for services to the entertainment industry.
Mushroom Group said his family, who have asked for privacy, "loved him immensely".
"Michael in turn adored his wife Sue, son Matt and partner Cara, daughter Kate and husband Andrew and their children Nina-Rose and Lulu," the statement read.
"They meant everything to him, and he was immensely proud of them."
The music legend also often referred to his 200-plus staff as the "Mushroom Family".
"Michael's legacy will live on through his family and the enormously successful Mushroom Group – an enduring embodiment of decades of passion and determination from an incredible man."
https://news.google.com/__i/rss/rd/articles/CBMihgFodHRwczovL3d3dy45bmV3cy5jb20uYXUvbmF0aW9uYWwvbXVzaWMtbGVnZW5kLW1pY2hhZWwtZ3VkaW5za2ktdG8tYmUtaG9ub3VyZWQtd2l0aC1zdGF0ZS1mdW5lcmFsL2YwMTc4MGMzLWViODctNDQxMC04YzJmLWE3NWFiMmM4MGNhNtIBRWh0dHBzOi8vYW1wLjluZXdzLmNvbS5hdS9hcnRpY2xlL2YwMTc4MGMzLWViODctNDQxMC04YzJmLWE3NWFiMmM4MGNhNg?oc=5
2021-03-03 00:23:39Z
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