A dead two-metre shark that was found strung up by its tail and slashed across the torso in waters off the NSW central coast was probably still alive when it was targeted, according to a diver who discovered the "horrifying" scene.

Robbert Westerdyk, a member of the Terrigal Underwater Group, had just finished a dive at the HMAS Adelaide shipwreck off Avoca Beach on Saturday morning when he and a group of fellow divers saw a large shadow in the water as they prepared to leave.

The divers swam over to investigate, and were confronted with a shocking scene: a two-metre, 120-kilogram mako shark suspended on a mooring rope near the shipwreck's bow.

The dead shark appeared to have been deliberately tied up, and also had been stabbed on its torso.