Emergency services were called to Burraneer Bay on the Hacking River about 7.30pm on Friday, after receiving reports three men had been thrown from a jet ski.
The driver and one passenger, who were wearing life jackets, were rescued but the third man could not be located.
Police, surf lifesavers and paramedics searched for the man, believed to be in his 30s, for about an hour, before pausing their efforts due to poor light.
The search resumed on Saturday morning, with police divers joining the team scouring the water for the man.
They located a body in the vicinity of Shiprock Reserve, Dolans Bay, about 10.40am, a police spokesman said.
While it is yet to be formally identified, it is believed to be that of the missing jet skier.
Police will continue to investigate the incident and prepare a report for the coroner.
The 44-year-old driver of the jet ski remains in St George Hospital with suspected chest injuries but his 39-year-old passenger was not injured.
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