The New South Wales Police Force said in a news release the body of the 39-year-old woman was found about 4 p.m. Saturday in the bathroom of the Lady Rose, a three-level charter boat.
Officers from the Marine Area Command attended, along with Fire and Rescue NSW HAZMAT crews as a crime scene was established.
"Investigators were advised that several gas detection tests were conducted in a bathroom area of the vessel and were found to be in excess of safe operating levels," NWS police said.
A smell on board the ship at the time was believed to be hydrogen sulfide, a gas being emitted from the black water tank, 9NEWS reported. The captain of the boat at the time was about to empty the tank when the woman's body was discovered.
Police said on Monday an autopsy is underway to determine the cause of the woman’s death, while the boat has been secured for further forensic testing.
The boat, owned by charter company All Occasion Cruises, is described as having three separate levels and "an expansive sky deck."
"Guests can enjoy a delicious dinner in one of her two dining rooms or gaze at the Sydney sights on her wrap-around decks," according to the cruise company.
All Occasions Cruises told the Sydney Morning Herald it plans to work closely with investigators to understand what happened. The company did not reply to a request for comment from Fox News.
"The Lady Rose has carried tens of thousands of passengers for quality Sydney Harbour cruise events for many years, without major incident. This tragic event is very upsetting to the whole crew and operations team and we send our deepest condolences to the lady’s family," a spokesman told the paper. "We do not believe it at all appropriate to speculate on this tragic incident and will comment only when the facts are known."