George May started feeding his oysters with the anti-impotence drug in order to export it to the overseas market.
The 59-year-old came up with the idea of feeding Viagra to oysters after he underwent surgery for prostate cancer.
May claims tests have proven the oysters show trace elements of sildenafil citrate, the active ingredient in Viagra.
May has registered his product as "Viagra Oysters", and estimates that it could be worth 300 million dollars.
But his use of the Viagra trademark in his marketing has drawn the fury of pharmaceutical giant Pfizer and state food authorities.
Law firm Baker & McKenzie, acting on behalf of Pfizer, has threatened legal action if the farmers don't deregister the business name.
Food Safety NSW says that May's accomplishment is against the law and breaches the NSW shellfish program under the food act.
But May, who has patented the process, is unwavering and asserts that he will carry on harvesting the oysters and relocating them to tanks full of crushed Viagra because there is an overseas market.
"We realise we will not be able to sell them in Australia but we haven't been told we can't harvest them here despite a number of conversations with the food authority," the Daily Telegraph quoted May, as saying.
"Other countries have different regulations so we will be selling overseas.
I'm happy to change the name but they are going to have a real David and Goliath battle if they want me to stop," he added.
However, food authorities and health groups are concerned, saying the drug is infecting the oysters.
"There are tight regulations on oysters in NSW so they are safe. They can't add Viagra to oysters - it is no allowed, it's up to doctors to prescribe Viagra. Even giving it away is illegal as it is a form of marketing to induce a sale," a Food Safety NSW spokesman said.