The rescue came after three men failed to return from a fishing expedition on Thursday.
The trio had set out in a boat from Leeman, 170 miles north of the Australian city of Perth.
Their failure to return sparked a search that covered 125 square miles of ocean.
But it was a local news helicopter that spotted a 49-year-man who had been treading water for 20 hours after their fishing boat crashed.
Channel Seven news reporter Grant Taylor dramatically relayed the action as it happened.
"When we first spotted him, one of the scariest things was there was a massive hammerhead shark not 20 metres (yards) away from him, just slowly circling around him," he told ABC radio.
"He's stark naked ... just struggling to swim and float on his back and try and keep his head out of the water," he added.
"He keeps waving at our chopper trying to get us to come down and help him but there's nothing we can actually do."
Mr Taylor said an inflatable rescue raft was dropped, but it drifted away from the fisherman.
"He just keeps putting his hands together praying, but he doesn't realise there's a boat just right behind him as we speak right now. Come on mate, just turn around and have a look, you're saved. He's yelling 'help'."
Mr Taylor said the man was finally picked up by a search and rescue vessel. He survived the ordeal but a second man who was found later died after being rescued.
West Australian police said the third man remains missing.
"We haven't spoken to the survivor yet and until then we don't know what happened," a police spokesman said.