Australian diplomatic staff have been evacuated from the embassy, as Russian troops to continue to amass near the border.
It comes after the US has warned a Russian invasion of Ukraine would be imminent.
Mr Frydenberg said US officials weren't exaggerating the situation in Ukraine, and that Australia was working alongside its security allies.
"It's a very dangerous situation and the reverberations will be felt far and wide if, in fact, the Russian do invade," Mr Frydenberg told the Nine Network on Monday.
"We're at a very dangerous juncture here, you don't amass more than 100,000 troops on a border to check out the view or to have a picnic."
Mr Frydenberg said Australia was monitoring the situation in Ukraine closely, but would not pre-empt what Australia would do should Russia invade.
Australian diplomatic staff have been directed to a temporary office in Lviv.
Labor deputy leader Richard Marles said the situation in Ukraine was concerning.
"We very much respect its territorial integrity, its sovereignty, Russia should do the same," he told ABC TV.
"We're particularly mindful of the Ukrainian Australian community, who are feeling it particularly tough at the moment."
The federal government has been warning Australians in Ukraine to leave immediately in light of the situation.
Prime Minister Scott Morrison previously said Ukraine had reached a "dangerous stage" as tensions mount.
"I want to send a very clear message on behalf of Australia ... that the autocratic, unilateral actions of Russia, to be threatening and bullying Ukraine, is something that is completely and utterly unacceptable," he said on Sunday.
US President Joe Biden and Russian President Vladimir Putin held crisis talks on Ukraine on Sunday.
Russia was warned during the meeting there would be "swift and severe costs" should an invasion happen.