Emergency services were called to Barwon Heads, 20km south-east of Geelong at 6.50am on Saturday after reports two men had gone overboard in their five-metre fishing boat.
Three members of the public on jet skis were asked to travel 100m offshore to help the men as rough sea conditions made it unsafe for nearby boats to attempt a rescue.
The river mouth can seem deceptively calm but waves can reach three to four metres high once it reaches the ocean, Senior Constable Kevin Hoare said on Saturday.
"They were about three to four metres this morning," he said.
The jetskiers arrived on the scene about 25 minutes after the capsize and rescued a 61-year-old man from Moriac who was sitting on top of the overturned tinny.
He was taken to hospital with non-life-threatening injuries of minor cuts and bruises.
The other man, a 66-year-old from Anglesea, was believed to have been entangled in anchor rope underneath the boat and was unable to be freed.
Life Saving Victoria members extricated the trapped man at about 7.30am but he was declared deceased at the scene.
The popular fishing spot usually attracts lots of boats but Mr Hoare said many didn't want to go out this morning due to the size of the waves.
"This particular boat has taken that risk," he said.
"They've gone out through the Heads and it's unfortunately resulted in the boat capsizing."
The two men are believed to be work associates and were assumed to be experienced after trying to navigate the high waves.
"It's an absolute tragedy, especially since both men were wearing life jackets, but unfortunately in this case that didn't save the deceased male," the senior constable said.
Police will prepare a report for the coroner.
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