Lee Gwang-Wook, 53, suffered breathing difficulties after reaching a depth of 25 metres said coastguard spokesman Ko Myung-Suk.
The 53-year-old, who was making his first dive at the scene, lost consciousness and was pronounced dead in hospital.
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He was the first victim among scores of divers engaged in the grim and dangerous task of finding and retrieving bodies from the sunken ship, while fighting strong currents and low visibility in silty water.
Some 10 others have received treatment for exhaustion and decompression sickness since the operation began.
It has been 20 days since the 6,825-tonne Sewol capsized and sank with 476 people on board - most of them schoolchildren - off the southwest coast. The confirmed death toll stands at 263, while 39 people remain missing.
President Park Geun-Hye today issued a fresh apology for her government's failure to prevent the tragedy and renewed a pledge to eradicate "corruption and wrongdoing" blamed for the disaster.
"As the president who should protect the lives of the people, I don't know how to express my condolences to the bereaved families. I feel sorry and my heart is heavy with grief," she said.
Park previously apologised for her government's failure to combat systemic and regulatory "evils" that may have contributed to the accident and vowed to sternly punish culprits.
The ferry sinking is one of South Korea's worst peacetime disasters, made all the more shocking by the loss of so many young lives.
Of those on board, 325 were students from the same high school in Ansan city just south of Seoul.
All 15 of the surviving crew including the captain who were responsible for sailing the ferry are in custody, facing charges including negligence and abandoning passengers.
The independent Hankyoreh Shinmun daily said enforcement of safety regulations remained lax despite earlier incidents. In 1993, 292 passengers perished when an overloaded ferry sank off the west coast.
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