Gross domestic product (GDP) shrunk 7% in the April-to-June quarter compared to the previous three months.
This is the biggest fall since records began back in 1959 and comes after a fall of 0.3% in the first quarter.
An economy is considered to be in recession if it sees two consecutive quarters of negative growth.
Australia was the only major economy to avoid a recession during the 2008 global financial crisis - mainly due to demand from China for its natural resources.
At the start of this year, the economy was hit by falling economic growth due to an extreme bush fire season and the early stages of the coronavirus outbreak.
More recently the shutdowns of businesses across the country have taken their toll, despite measures by the government and central bank to support the economy.
This is the worst economic growth in 61 years due to a severe contraction in household spending on goods and services.
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