The carcass of a 5.2-metre (17-foot) adult male was found in the Fitzroy River in central Queensland on Thursday with a single gunshot wound to the head, the environment department said.
"It is illegal to 'take' and kill a crocodile without authority and police will work closely with (the environment department) to locate the person responsible," Queensland police said.
Under the state's conservation laws, the maximum penalty for the unlawful killing of a crocodile is Aus$28,383.75 (US$22,530).
The incident sparked warnings about heightened aggression among younger crocodiles in the wake of the giant predator's death.
"People need to clearly understand the death of this animal has changed the balance of the crocodile population in the Fitzroy," the environment department's diversity operations director Michael Joyce told the Australian Broadcasting Corporation.
"And we can expect increased aggressive activity by younger male crocodiles. That's because they will be competing to take the dominant position which is now vacant." Joyce said.
"He is a crocodile that does spend a fair bit of time controlling the river and controlling the young animals that are in the river."
Joyce added that he didn't think the crocodile had posed a problem but rather, was "an important part of our ecosystem".
Saltwater crocodile numbers have exploded since they were declared a protected species in the 1970s, with recent attacks reigniting debate about controlling them.
The "salties", which can grow up to seven metres long and weigh more than a tonne, are a common feature of the vast continent's tropical north and kill an average of two people a year.
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