A Telegram post in a pro-Russian channel said the man had been killed by Russian forces near Pokrovsk in Ukraine on December 10.
AAP has chosen not to name the man as the information has not been independently verified.
Russia has intensified its assault against the city in Ukraine's far east, with the Kremlin claiming full control on December 1 and President Vladimir Putin saying the capture of Pokrovsk would enable the military to advance further.
Although Kyiv maintained its troops still held positions in the city's north on December 11, a day after the man was allegedly killed.
He is said to be from Gosford but lived in Brisbane before moving to Ukraine in 2023 to fight against the Russian invasion.
"The Department of Foreign Affairs and Trade is aware of a report that an Australian has died in Ukraine," a spokesperson told AAP.
"We are seeking urgent confirmation from local authorities."
Travel advice remains do not travel to Ukraine, and Australia's ability to provide consular assistance is limited due to Russia's ongoing invasion.
The spokesperson said the department couldn't comment further owing to privacy obligations as it provides consular assistance to the family.
It follows Australian man Oscar Jenkins being captured by Russian forces after fighting in Ukraine.
Russia sentenced him in May to 13 years in a maximum security prison for being a mercenary in a move slammed by Australian authorities, which branded it a "sham trial".
Australia has told Russia that, given Mr Jenkins was fighting as part of Ukraine's armed forces, he is a prisoner of war and must be afforded associated rights under international law.
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