The victim, aged 55s had been bodyboarding off the coast of Broome’s Cable Beach at the time of the attack, according to ABC News.
The attack is believed to have occurred roughly 1.5 km north of the Cable Beach Surf Club.
Police said later that they shot at the shark, which lingered close to the shore, for almost half an hour after the attack.
The species of the shark was not immediately confirmed, but locals told reporters it may have been a tiger shark, which are sometimes drawn close to the shore by shoals of small fish.
Kimberley District Office police inspector Gene Pears told reporters that the victim had been around 30 to 40 metres from the shore when he was attacked.
A couple on the beach saw thrashing in the water and rushed to drag the man to safety. The man suffered injuries to his leg and hand.
“It's a tragic incident, very unexpected, a person going out to have a bit of fun in the water,” Mr Pears added.
Western Australia’s Department of Primary Industries and Regional Development (DPIRD), said a fisheries patrol vessel was monitoring the area as the shark remained at large.
Following the incident, the Shire of Broome announced that it was closing all local beaches to community access following the “tragic fatal shark attack”.
Cable Beach is a popular tourist destination. However, there have been saltwater crocodile sightings and box jellyfish attacks reported at the beach in the past.
The victim was the eighth to die in a shark attack in Australia this year, the highest toll since 1929 when nine died.
The introduction of shark nets at popular beaches in the 1930s led to a significant fall in fatal attacks.
The most recent previous attack in Western Australia occurred on October 9, when a surfer was taken by a shark at Esperance on the state's south coast.
Broome, near where the latest shark attack took place, is about 1,000 miles north of Western Australia's largest city, Perth.
Additional reporting by AP