The helicopter crashed in waters near Hamilton Island late Friday. Search efforts are underway to find the four-member crew.
TRT World quoted Reuters as saying a military official said the exercises were suspended following the crash.
The "Talisman Sabre" military exercise involves two weeks of war games involving more than 30,000 troops and participants from 11 different countries as a show of strength and unity amid Chinese pressure in the region.
The exercises, which take place in various locations across Australia, include land and air battles as well as amphibious landings.
Source: TRT World