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The 61-year-old died after his car hit a tree during a rally in the state of Western Australia, Australian Broadcasting Corporation radio reported.
The Confederation of Australian Motor Sport (CAMS) said Brock was competing on the first day of Targa West rally, a tarmac special stage rally, when his vehicle hit a tree near the small community of Gidgegannup, about 40 kilometers east of Perth, capital of Western Australia.
Brock's co-driver has been taken to hospital in a stable condition.
CAMS said it will conduct a full investigation as the circumstances of the accident remain unclear.
"On behalf of the motor sport community, CAMS offers its sincere sympathy to Peter's family and many friends," CAMS said in a statement.
Known as "Peter Perfect" and the "King of the Mountain," Brock won the Bathurst 1000 nine times in the 1970s and 80s.
In 1969, the Holden Dealer Team gave Brock his first break to drive at the Bathurst 1000, and he placed third.
He became the team's lead driver and won the 1979 race by a record six laps.
Brock retired from full-time racing in 1997 and established his own charity to help disadvantaged children, but returned to Bathurst to win the 24-hour race in 2003.