A man's body has been discovered onboard a luxury yacht in Sydney Harbour, sparking a police investigation into the circumstances of his death.

Sydney Water Police officers received reports of a concern for welfare for a man aboard a two-masted sailboat in Little Sirius Point, Cremorne Point about 5.45pm on Sunday.

Authorities arrived at the scene to find the body of the man, believed to be aged in his 60s, on the vessel.

Reports have indicated the man was possibly overcome by fumes produced by the engine and other appliances burning fuel when he was working on the boat, according to the Sydney Morning Herald.

Police are currently investigating the incident and a report will be prepared for the coroner.

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