The terrifying scene unfolded in the Ord River in the far north of Western Australia.
Witness Chelsea Wood told NCA NewsWire: “There were a lot of people fishing and children splashing around in the water – people were oblivious.
“We had been out fishing in knee-deep water, metres from where we (later) saw the croc.
“We were just copying the locals.”
She estimated the crocodile was about 16 feet long.
In drone footage captured of the encounter, the bull shark seems to swim away from the much-larger crocodile after seeing it nearby.
Male bull sharks can grow to about seven feet in length.
The shark was dwarfed by the massive saltwater crocodile – which are the largest reptile in the world.
Some crocodiles in Australia can grow to be 20 feet long, and weigh as much 1,300kg.
Ms Wood and her partner Bryce Connole shared the video to their YouTube channel Caravan Adventure Aus last week.
The couple filmed it while on holiday in Australia.