Dennis Reid, 66, was diving at the wreck of the Zenobia when he failed to return to the surface on Thursday.
Mr Reid, who served mainly in the Belfast and north Down areas, left the PSNI and moved to Cyprus in 2008 where he established a successful business, DGR Diving, with wife Olecea near Protaras.
Local media reported that a search party recoved Mr Reid’s body from a rarely visited compartment of the shipwreck around 11am on Friday.
It is not yet known how such an experienced diver, who had visited the wreck many times, got into difficulties.
Mr Reid’s sister Linda said her brother “died doing something he loved on an island he loved”.
Announcing the sad news on social media, Linda said: Cyprus police told me today that after finding a camera in the wreck of the ship he was diving in, the have now found a body.”
Orange Order grand secretary Mervyn Gibson remembers Mr Reid as a young constable stationed in Greencastle, north Belfast in the late 1970s, and the former colleagues were reacquainted in recent years through social media.
Rev Gibson, who was also a police constable at the time, said Mr Reid was always a diligent and dependable officer.
“I always considered Dennis a good colleage and and good friend.
"I remember him as being very methodical in his approach to his work and it was a privilege to serve with him.”
Rev Gibson said he has always enjoyed seeing former colleagues succeeding in new ventures, and added: "I wished him well with his new career when he left for Cyprus”.
In a social media post early on Friday, Linda Reid said: "Although not formally identified by family there can be no doubt that its Dennis. Dennis was a very experienced diver and instructor who dived on this ship many times.”
St John's Anglican Church in Deryneia, said: "It is with deepest regret that we have learnt of the death of a much loved member of our congregation. Dennis Reid died in a tragic diving accident yesterday. We offer sincere condolences to Dennis' wife Olesea, his brother Billy and sister in law Linda in Cyprus and all the Reid family and friends in Northern Ireland. May Dennis rest in peace and rise in glory."
Mr Reid was a popular and well-known figure in the scuba diving community, and retained many friends from career in policing.
In a Facebook post, one former colleague said: “Just heard a dear friend who introduced me to scuba diving many years ago in Cyprus has passed away during a penetration dive on the world famous wreck Zenobia or the 'Zen'. Dennis you were a dear friend and instructor; you passed doing something you loved. You will be sadly missed at the dive sites may you rest in peace my friend.”
Another, who was a constable serving under the then Sergeant Reid, described him as “an absolute gentleman,” and “an excellent boss”.
Although the Zenobia is often listed as one of the ten best dives in the world, it has claimed a number of divers’ lives since it sank to a depth of 42 metres around 1,500m off the east coast of Cyprus.
According to the Cyprus Mail, there have been six fatal incidents at the wreck since it sank in 1980 on its way from Syria to Sweden