The premises, in Storey Street at Maroubra in Sydney's eastern suburbs, was set on fire about 1am on Tuesday, police said.
It's the fourth major anti-Semitic incident in Sydney's east in three months.
Officers have established a crime scene and are investigating the circumstances surrounding the latest incident.
The childcare centre is directly around the corner from the Maroubra Synagogue on Anzac Parade.Â
The incident comes with the nation's Jewish community reeling over an attack on Friday on the former Dover Heights home of Executive Council of Australian Jewry co-chief Alex Ryvchin in which the house was defaced with slurs and cars were set alight outside.
In its wake, legal experts have cast doubt on a federal coalition plan to set minimum jail terms for terrorism offences and displaying hate symbols.
Opposition Leader Peter Dutton announced his plan for tougher laws to combat anti-Semitism at Bondi Central Synagogue on Monday, as Prime Minister Anthony Albanese asked Australian activists for calm during a six-week ceasefire in Gaza.
Terrorism offences would attract a minimum of six years in jail under the coalition's proposed laws, while those displaying terrorist organisation signs, Nazi symbols or performing a Nazi salute would face at least a year behind bars.
But there was no evidence mandatory sentences deterred offenders, Australian Lawyers Alliance spokesman Greg Barns said.
"Furthermore, mandatory jail terms lead to injustice," Mr Barns said.
"They force courts to impose sentences where the circumstances do not warrant it because of the nature of offending, or the background of the offender."
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