Police and emergency services were called to the lakefront in front of the intersection of Dungarvon and Ardmore Sts at 3.02pm.
The man (39) was given medical treatment at the scene but later died.
It had been another scorching day in Wanaka and the lakefront was packed with holidaymakers, tourists and locals.
Witnesses said the man had waded only about 20m into the water when he appeared to get into difficulties.
His wife began screaming for help and about 20 people rushed to the man's aid.
An Australian tourist visiting Wanaka, who did not wish to be named, said a doctor from Finland and another doctor started performing mouth-to-mouth resuscitation before the man was out of the water.
Wanaka volunteer fire brigade officers, St John staff and police arrived at the scene soon after and took over.
The incident brought shoppers out on to the street and hundreds up and down the lakefront watched in almost total silence as the drama unfolded in full view before them.
Some shed tears; others were visibly shaken. Almost no-one moved and there was an eerie hush as everyone watched the volunteer fire officers taking turns to perform CPR continuously on the man, willing the man to live.
As the minutes ticked by a tarpaulin was erected, St John staff brought more and more resuscitation equipment down to the water's edge.
Then a Queenstown Lakes District Council four-wheel-drive vehicle and trailer with a jet-ski drove on to the lakefront and parked in front of the emergency scene, providing privacy for the emergency crews and the man.
The man's wife and son were comforted by others on the beach, some of them strangers, as emergency crews continued to try to revive the man.
At 5pm yesterday, police issued a statement to say the man had been pronounced dead.
