According to initial reports the diver, a man aged 24, got into difficulty while on a late-morning dive with a group on the Koln wreck.
He was recovered aboard the dive-boat, on which efforts were made to resuscitate him. The emergency services were called as the diver was hurried ashore.
He was met by an ambulance, but the crew had to report that he had died.
Northern Constabulary is carrying out an enquiry and will report to the Procurator Fiscal.
The wreck of the Koln, a German light cruiser, lies in 35m of water off the eastern side of Cava, an islet of the northern tip of Hoy Island.
Lying on its starboard side, the wreck remains in good condition, and is a popular dive.
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