The nine-year-old boy was hit by the bolt while in the surf at Warilla Beach at Barrack Point, Surf Life Saving NSW said.
"Very visibly, he had the burns from the lightning strike," chief executive Steve Pearce told ABC News.
"The lifeguards were on the beach, they were able to go to his assistance straight away and started performing life-saving CPR until the paramedics and the doctors could arrive."
The boy went into cardiac arrest after being hit and suffered burns to his chest.
Surf lifesavers patrolling nearby started CPR on the nine-year-old with the help of a doctor who was on the beach with her family.
Ambulance crews and police responded soon after and paramedics took over resuscitation efforts.
A helicopter was dispatched from Albion Park with a doctor and intensive care paramedic who helped stabilise the boy.
They re-established his heartbeat and breathing before transferring him by road to Westmead Children's Hospital, where he remained in a critical but stable condition on Friday afternoon.
"This is quite a rare but very serious incident with the child going into cardiac arrest following the lightning strike," NSW Ambulance Inspector Terry Morrow said.
"The actions of those lifesavers played a crucial role in the boy's resuscitation.
"While this is a rare and unfortunate incident, it is a reminder that when there are electrical storms in the area you should avoid being in bodies of water and that indoors is the safest place to be."
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