The experienced game fisherman has been identified as Paul Barning.
The incident happened off Port Stephens, north of Newcastle on the NSW coast.
Mr Barning had been competing in a fishing competition in the area, which was called off after he went overboard.
Some 40 boats in the area joined police in the search but he did not resurface, NSW Police Superintendent Joe McNulty told reporters on Monday.
A search will resume on Tuesday, extending as far south as Jervis Bay, east of Canberra.
"It is a large search area, it's 1500 nautical miles at this stage, because the current is moving so fast," Supt McNulty said.
He said it appeared to be a tragic accident, but recovery efforts could have been assisted if the fisherman had taken precautions.
"He's 55km offshore without a life jacket ... tragically, that may have assisted in his recovery," he told reporters on Monday.
"It doesn't matter how experienced you are, how long you've been fishing, please wear a life jacket," he said.
NSW Game Fishing Association president Steve Lamond, who said he had known Mr Barning for 20 years, described the Sunday afternoon incident as a freak accident.
"He was basically dragged overboard, underwater and disappeared," he told AAP on Monday.
"He was tragically lost at sea in the most unlikely of circumstances whilst fishing on his boat."
Mr Lamond urged against speculation Mr Barning had been attacked by a shark, with police believing he had become entangled and dragged overboard while a shark was on the line.
"The shark has taken off and that fishing line has pulled taut and maybe contributed to him going over the side of his vessel," Supt McNulty said.
"There's no evidence to say that shark has attacked the person in the water," he added.
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