The 23-year-old ewe or female sheep, reportedly died of an illness at her owner's farm in Lake Bolac in the town of Victoria.
Lucky's owners, the Westgarths, said in interviews that the sheep may have died after being unable to endure recent hot weather.
The sheep, abandoned as a newborn, was rescued by the Westgarth family. She was recognized by the Guinness Book of World Records as the oldest sheep in September 2007.
According to a Daily Telegraph report, Lucky "became increasingly catankerous, fighting with other sheep and destroying the [Westgarth] couple's flowerbeds. Recently the old ewe was allowed inside the house to watch television."
Later on, Lucky was separated from other sheep to prevent further fights.
The sheep has reportedly lived up to twice the normal life expectancy for sheep. Lucky was buried at the farm property.