Ronald Stephen Schneider was surfing with friends Tuesday at the Mentawai islands, a world famous surf spot off Sumatra's west coast, when he fell from his board onto a shallow reef. He was 54, local media reported.
Mentawai police chief Reko Indro Sasongko said Schneider's friends became worried when he did not return to their boat, and they went searching for him in a rubber dinghy.
"They found his board no longer attached to his leg, and not too far from there they found his body," Sasongko told AFP.
His body was taken back to the city of Padang on the Sumatran mainland where preparations were being made for a return to Australia, he added.
The Department of Foreign Affairs and Trade confirmed it was providing consular assistance to the family of an Australian man who had died in Indonesia.
Indonesia is a magnet for surfers, particularly from Australia, seeking world-class waves in unspoilt surroundings.