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Videos posted to social media showed boats ploughing through a blanket of dead fish smothering the water, with the surface barely visible underneath.
The New South Wales government said on Friday that "millions" of fish had died in the Darling River near the small town of Menindee, in the third mass kill to hit the area since 2018.
"It's horrific really, there's dead fish as far as you can see," Menindee local Graeme McCrabb told AFP.
"It's surreal to comprehend," he said, adding this year's fish kill appeared to be worse than previous ones.
"The environmental impact is unfathomable."
Populations of fish such as bony herring and carp had boomed in the river following recent floods, according to the state government, but were now dying off in huge numbers as floodwaters receded.
"These fish deaths are related to low oxygen levels in the water (hypoxia) as flood waters recede," the government said in a statement.
"The current hot weather in the region is also exacerbating hypoxia, as warmer water holds less oxygen than cold water, and fish have higher oxygen needs at warmer temperatures."
Previous fish kills at Menindee -- about 12 hours' drive west of Sydney -- have been blamed on a lack of water in the river due to prolonged drought, and a toxic algal bloom that stretched over 40 kilometres (24 miles).
"Unfortunately this won't be the last," the NSW government warned in 2019.
State government fisheries spokesman Cameron Lay said it was "confronting" to see the river choked by dead fish.
"We are seeing tens of kilometres where there is fish really as far as the eye can see, so it's quite a confronting scene," he told the ABC.
Menindee has a population of some 500 people and has been ravaged by both drought and flooding in recent years.
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