Australia sends all boatpeople to Papua New Guinea and Nauru -- where two refugees recently set themselves on fire -- and insists they settle there or return home.
The immigration department said the 26-year-old died "from suspected heart failure".
"The man admitted himself to the Republic of Nauru Hospital on May 9 complaining of chest pains," it said in a statement.
"He was receiving ongoing treatment in hospital, but died early today after a series of cardiac arrests."
"(His) friends say his suicide was driven by the same desperation as others on Nauru. There is no future," the coalition said.
Earlier this month a 21-year-old Somali woman set herself on fire on Nauru, just days after an Iranian man died in a similar act of self-harm. The woman was airlifted in a critical condition to a Brisbane hospital.
Advocacy group GetUp! said the Bangladeshi man had been on Nauru for more than two years, and was found to be a refugee, after arriving as an asylum seeker.
"It is time to bring those who have been unlawfully and cruelly detained to safety in our communities."
Since 2013, Australia has denied people arriving in the country by boat any chance of settling here, even if found to be refugees, sending them instead to offshore camps criticised by rights groups.
Nauru has since converted its detention facility into an "open centre" in which inhabitants have freedom of movement, while Papua New Guinea's government has said it will close its centre after a court found it to be unconstitutional.
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