A group of people were celebrating a birthday party Saturday when two guests decided to go for a swim in the Mary River, located about 100 km from Darwin.
One of the swimmers was attacked by a crocodile and dragged into deeper water.
Numerous signs are posted warning people about the danger of swimming in the river, but many people like to "risk their lives", a resident told ABC.
Emergency services personnel are searching the river for the victim's body.
The crocodiles that live in the Mary River Wilderness Retreat are known for their attacks on humans.
The animals, which are found in northern Australia's tropical region, were declared a protected species in 1971.