Sarah Teelow, 20, came off her skis shortly after the start of the Bridge to Bridge Water Ski Classic near Sydney on Sunday.
She suffered serious spinal and head injuries and later died in hospital.
Sarah Teelow won the Formula 2 category at the World Waterski Racing Championships in Spain in September.
Ski Racing Australia described her as “one of the sport’s most accomplished young competitors”.
“The ski racing fraternity is deeply saddened by Sarah’s passing and extends its condolences to her family,” it said in a statement.
Sarah Teelow, from Wellington, was the daughter of two-time world water-ski champion Tania Teelow.
Local media say New South Wales police are investigating how Sarah Teelow came off her skis.
Skiers can reach speeds of more than 80 mph in the 70 miles Bridge to Bridge course.
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