In the landmark ruling, seen by news.com.au, the Victorian County Court found the journalist — known in court as "YZ" — was "exposed to a wide range of disturbing and graphic traumatic events" between 2003 and 2013.
She looked at photographs of dead bodies where there was "blood everywhere", spent several days at a rubbish dump where police discovered body parts from a woman who had been murdered and "chopped up" by her husband, and was threatened by the wife of a notorious Melbourne gangland figure.
The story, first reported by The Conversation, could have repercussions for newsrooms around the world.
YZ told her editors she had "had enough of death and destruction". She was "in tears in the newsroom" writing the Freeman story and was later transferred to the sports desk at her request.
But the deputy editor of The Age at the time asked her to return to her original crime reporting round. She claims she declined but was asked to go away and think about it. Later, she was told "it was going to happen" despite her protests, court documents show.
Over the period of 10 years, she covered Melbourne's gangland war, reported on dozens of grisly murders and attended countless crime scenes.
A summary of her exposure to trauma included inadvertently informing colleagues of Aneta Pochopien that the young Melbourne mum had been murdered in her driveway in 2004.
She saw the victim's body at the scene but there was "no inquiry from the newsdesk as to how she was feeling", according to court documents.
That same year she reported on the murder of Anna Kemp, whose body was discovered at a tip. She and her 16-month-old daughter had been murdered by her husband. After several days on the ground at the site where body parts were discovered, YZ received no assistance despite police requiring counselling.
A year later she attended the scene of the Burrell family drowning at Warrnambool. She spent five days of "pretty horrible and draining work" after the family of five was washed off the rocks on Victoria's southern coast.
She attended their funerals, spoke with the bereaved and viewed an image of one child who had part of his face missing when his body was recovered.
In 2006, YZ was asked to visit Altona, north of Melbourne, where the Irwin sisters — Colleen and Laura — had been raped and murdered.
She obtained photographs of the victims' bodies and said "there was blood everywhere".
In his judgment, Judge Chris O'Neill accepted YZ's condition had improved since she left the newspaper but said "there are many symptoms which are still present and she remains vulnerable to flare-ups of the condition indefinitely".
He said YZ suffered from a range of symptoms of PTSD including depression and anxiety, panic attacks and trouble sleeping. He said she experienced graphic nightmares relating to the events she witnessed, as well as flashbacks.