The crewman, Lt. Chris Saunders, was one of 57 aboard the HMCS Chicoutimi that is now adrift in the Atlantic off the Irish coast.
"He gave his life saving his country, and we pay him our profound respects and his family our deepest condolences," Prime Minister Paul Martin told the Canadian parliament in Canada, CNN reported.
Chicoutimi, recently acquired from Britain's Royal Navy, caught fire Tuesday morning about 100 miles northwest of Ireland while bound for Halifax, Nova Scotia, CNN said.
The British coast guard launched a rescue operation to airlift Saunders and two other injured sailors from the sub, which had a crew of 57, the Canadian defense department said.
Saunders died while being transferred to a hospital in Ireland, Martin said.
The submarine, to be towed back to Scotland before the end of the week, was the last of four long-range, diesel-electric submarines Canada purchasedc from Britain.