About 960 rubber ducks will be launched in the Hawea River on Sunday.
The owner of the first numbered duck to reach Albert Town will win $1000.
Lake Hawea Community Centre chairman Geoff Hewson said individual rubber ducks were being sold to raise funds for a redevelopment.
Residents had raised more than $1 million to redevelop the community centre at Peter Fraser Park and needed about $60,000 more before work could start on the project, Mr Hewson said.
Community centre fundraising committee member Doug Brenssell said prizes worth $2750 were enticing punters in the rubber-duck derby, which was due to start at 10am on Sunday.
A gala carnival would also be held at the community centre on Sunday as part of the fundraising project.
A demonstration from 14-year-old Cromwell woodchopping prodigy Brad Pako was expected to be a highlight of the day, along with a performance by Lake Hawea chainsaw sculpture artist Andrew Hedley, Mr Brenssell said.
Mr Hewson said it was expected the rubber ducks would take about four hours to "race" down the Hawea River.
They would be shepherded by kayakers, who would free any snagged "birds".
The numbered ducks cost $10 each and can be bought at Four Square Wanaka and at Lake Hawea shops.
