Crew members aboard the Pacific Explorer discovered the 23-year-old passenger was missing about midnight on Tuesday.
The vessel was 70km in a two-metre swell off the coast of Cape Jaffa in the state's southeast when the incident was reported to authorities.
An aircraft coordinated by the Australian Maritime Safety Authority and the ship searched through the early hours of the morning in windy conditions.
They were joined by two helicopters at daybreak on Wednesday and the woman's body was found in the water just before 7am.
"This tragic discovery comes after an overnight search and rescue operation," a spokeswoman for the ship's operator, Carnival Australia, said in a statement.
"We continue to provide care and assistance to the family member this guest was travelling with and extend our deepest condolences to their loved ones."
The company said the death had also "deeply impacted" other guests and the crew.
"We thank all involved who supported this distressing and challenging search operation," the spokeswoman said.
The ship, which can accommodate about 2000 guests, left Victoria on Tuesday for a four-night return voyage from Port Melbourne to Kangaroo Island.
The visit to the island has been cancelled and the ship is returning to Melbourne.
Victoria Police will conduct an investigation into the circumstances surrounding the death.
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