Water police battled rough seas on Monday in the search for the passenger, who went overboard as the Pacific Adventure sailed about 10 nautical miles south-southeast of Sydney Harbour.
Cruise operator P&O said a person-overboard alarm was raised 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.
Marine Area Command head Joe McNulty earlier said swells of up to five metres forced  authorities to rely on heat-seeking technology to find the passenger.
The search area was 18km outside Sydney Heads and covered a large area, spanning around 60 square nautical miles of water, he said.
Authorities had hoped to find the passenger alive given a life ring from the cruise ship was yet to be recovered.
The search was led by police and involved the Pacific Adventure and nearby cruise ships.
A P&O spokeswoman said the family of the overboard passenger was "being cared for by our onboard team while every effort is being made to find (the passenger)".
The Pacific Adventure was due to dock at Sydney's White Bay Cruise Terminal inside the harbour on Monday morning after a three-day cruise off the NSW coast.
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