Water police battled big swells on Monday in the search for the passenger from P&O's Pacific Adventure after an alarm was sounded on the ship at 4am.
More than six hours later, officers from NSW Police's Marine Area Command retrieved a man's body from the water.
Authorities say a life ring from the cruise ship is yet to be recovered. (Bianca De Marchi/AAP PHOTOS)
An investigation has been launched into the incident and a report will be prepared for the coroner.
P&O said its vessel had been cleared to return to port following the search, about 18km outside Sydney Harbour.
"We thank guests for their care, understanding and patience on what's been a distressing day for guests and crew," a company spokeswoman said.
She said the family of the dead man was "being cared for by our onboard team".
Marine Area Command head Joe McNulty earlier said swells of up to five metres forced authorities to rely on heat-seeking technology in the search.
Authorities had hoped to find the passenger alive given a life ring from the cruise ship was yet to be recovered at the time.
The Pacific Adventure was due to dock at Sydney's White Bay Cruise Terminal in the morning after a three-day cruise of the NSW coast.
Its next scheduled departure, for a four-day trip to Queensland, has been delayed until Monday night.
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