Home Affairs Minister Peter Dutton said Melbourne-born Neil Prakash ceased to be an Australian citizen "by virtue of his actions in fighting for Islamic State from May 2016", and he had been notified of the decision in December.
Canberra believes Prakash is a dual national because his father was Fijian. Prakash has been in Turkey on trial for charges relating to being a member of the Islamic State militant group since being caught there in October 2016.
However, the Fiji Sun newspaper quoted Director of Immigration Nemani Vuniwaqa on Tuesday as saying Prakash was not a Fijian citizen, which could complicate the Australian government's decision.
Vuniwaqa confirmed the comments to Reuters.
Australian law allows for dual citizens to be stripped of their citizenship if they are involved in groups the government has deemed to be terrorist organisations. However, citizenship cannot be revoked if that would leave a person stateless.
"The government has been in close contact with the Government of Fiji since Mr. Prakash was determined to have lost his citizenship," Dutton said in a statement.
"Australia will continue our close cooperation with Fiji on this issue and the many other areas of mutual interest," he said.
Australia's decision could potentially be challenged if Prakash does not hold dual-citizen status because he could be entitled to retain his Australian citizenship.A spokesman for the Fijian prime minister could not be reached immediately for comment on Wednesday.