The authorities said a woman, in her 90s, died in Sydney. She had contracted the virus in a family setting.
New South Wales reported 77 new cases on Sunday. There are now 52 people in hospital, with 15 in intensive care.
Sydney is currently in lockdown, as Australia's largest city fights to contain the highly transmissible Delta strain of the virus.
The reported death is the state's 57th and the first in 10 months.
NSW Premier Gladys Berejiklian warned that the number of new daily infections would rise further on Monday.