Linda Whitehurst, 52, was paddling her sea kayak near the eastern resort town of Byron Bay, about 375 miles north of Sydney, when the shark lunged at her, knocking her into the water, the paddler and police said.
It was one of two shark attacks in Australia that same day.
"I'm going to lose a limb, that was my first thought," Whitehurst told Australian television.
"I had my blade in my hands so I punched at it with my blade. That was the only way I was going to survive," she said, referring to the double-ended paddle used on sea kayaks.
"I just kept punching, punching, punching" at the shark until it swam away, she said.
Whitehurst made her way back to shore, where she received four stitches in her right arm for a small bite wound. Her vessel shows bite marks underneath.
Earlier in the day, a 31-year-old man was attacked by a bronze whaler shark while spearfishing near Australia's Great Barrier Reef.
The man, who was not identified, was treated onboard his charter boat for a deep cut to his calf muscle before being airlifted by helicopter to a hospital in the northern city of Cairns.