The 52-year-old man from Victoria was scuba diving with a friend in Kilsby Cave sinkhole on Saturday when he got into difficulty, police said in a statement on Sunday.
Police divers recovered the dead man's body from the sinkhole, at Mt Shank near Mt Gambier, on Sunday afternoon.
The second diver survived and was treated by paramedics at the scene.
A report will be prepared for the coroner.
Source: The Herald Sun