Police believe the body is that of a 34-year-old swimmer who appeared to run into difficulty before disappearing underwater at the lake about 4.30pm on New Year's Day.
Friends raised the alarm after the man failed to resurface.
Local Victoria Police officers and other emergency services scoured the lake and foreshore into the evening before suspending their search overnight.
The search resumed on Monday, January 2 after police divers were called in, and the body was found later in the morning.
Police will prepare a report for the coroner following the death.
There have been at least 22 drownings across the country since the start of summer, prompting a warning from life savers for Australians to stay safe.
Sixteen people drowned over the last new year's long weekend.
Meanwhile, the family of a five-year-old girl who drowned in Lake Nagambie last week has created a GoFundMe to help cover her funeral costs.
The child, from Wendouree, died after being pulled from the lake on December 27.
Emergency services responded to reports about 2.20pm that the girl had gone missing.
She was found in the water a short time later.
She was taken from the water to the lake’s bank, where emergency services performed CPR, but she died at the scene. Police will prepare a report for the coroner.
“Our beloved Alison was suddenly taken away from her loving family on the 27th of December in an awfully tragic accident,” the family wrote on its GoFundMe page.
“Ally Kitty was only five years old and was truly the sweetest and most loving little girl. She was adventurous, brave and full of life.
“Her passing has caused nothing but pain and heartbreak throughout our entire family. She left too soon and will be missed by everyone.”
The GoFundMe had raised nearly $8000 in three days and can be found at www.gofundme.com/f/funeral-costs-for-alison
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