As of Saturday afternoon, police were scouring a stretch of the Parramatta River, desperate for any sign of the girl who they say is seven years old.
The girl's mother and wife of the man was notified and was assisting police with their efforts.
Police were called to Hen and Chicken Bay in Concord in inner-west Sydney about 11.45am on Saturday following reports a man was floating in the water and believed to be dead.
Officers boarded a member of the public's boat and pulled the man from the water, providing first aid, but were unable to revive him.
NSW Police Burwood Command Superintendent Christine McDonald said while investigations into the cause of the incident were ongoing, her officers were "all out" trying to locate the girl.
"Our officers will search until we locate the seven-year-old girl," she said.
"We are looking in every place possible on the foreshore, in the water; we want to locate her as soon as possible."
The man has yet to be formally identified, but police said the family was from Westmead, in Sydney's west, and had hired the boat for the day.
Police understand the girl is the couple's only child, Ms McDonald said.
"Obviously, a mother in this situation who knows that her husband is now deceased, who also knows that a major search operation is under way for her seven-year-old daughter, her only child as I understand it - it would rock any mother to the core," she said.
A friend of the man contacted police an hour after his body was located, raising concerns for the father and daughter's welfare, police said.
Ms McDonald said whether the incident was deliberate or an accident was a "definite" line of inquiry.
"We are literally only hours from when we located this man, so there are several lines of inquiry currently under way," she said.
"But can I say from the outset, this is an absolute tragedy for the family and the community on every level.
"We will leave no stone unturned."
A search of the vessel hired by the man will be undertaken as part of police inquiries.
Specialist resources are assisting with the search, including police divers and marine and aerial assets.
Anyone with information is urged to contact police.
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