The accident occurred in the village of Tal Rabaa, near Daquq, about 200 kilometres (120 miles) north of Baghdad, said a senior officer with the Kurdish peshmerga forces in control of the area.
"This morning, at around 10:00 am local time (0700 GMT), an uncontrolled explosion has tragically killed the Australian supervisor of a team of 30 national deminers during ongoing operations," said his employer, the Swiss Foundation for Mine Action (FSD).
"The deceased has been working in the area for six months already and was a very seasoned explosive and demining expert with several decades of experience in this technical field."
The organisation did not release his identity but many tributes were published on social media by friends and colleagues from the area.
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The Australian authorities could not immediately be reached.
Daquq hosts a peshmerga base which has been a hub for foreign fighters wishing to volunteer with Kurdish forces in the fight against the Islamic State group.
The jihadists were forced from Daquq in 2015 but landmines and unexploded ordnance remain in the area.