Nine-year-old Charlise Mutten was shot dead before her body was dumped in a barrel in bushland in the Blue Mountains.
Homicide squad commander Detective Superintendent Danny Doherty said an extensive post mortem had revealed how the girl died.
The child's disappearance while holidaying at Wildenstein Private Gardens at Mount Wilson was reported on January 14, triggering an intensive five-day search of bushland until her body was discovered a week ago, in a barrel dumped near the Colo River northwest of Sydney.
"Charlise ... suffered a fatal gunshot wound and that's how she died," Det Supt Doherty told reporters on Tuesday, describing it as an "unimaginable" murder of a child.
Investigations are continuing and the crime scene at Mount Wilson is ongoing.
According to court documents, Charlise was killed days before she was reported missing.
Justin Laurens Stein, 31, faced court last week charged with murder after being arrested at a Surry Hills unit in inner Sydney.
Police have interviewed Charlise's mother Kallista who provided a formal statement that she was not present at the property at the time of the murder and corroborated other key evidence.
Police say there was no evidence that puts her at the property at the time of the murder.
Stein was alone with Charlise on the night of her murder, Det Supt Doherty said.
Police have released CCTV footage of a red Holden Colorado ute that was seen driving around and towing a boat in the inner Sydney suburb of Drummoyne followed by the northern areas of Wisemans Ferry and Colo River.
They allege Stein had previously tried to float a "covered up" boat at an inner-Sydney dock after buying sandbags from a hardware store, before travelling back to the Colo River.
A plastic barrel was missing from the property indicating a "high probability" of the murder taking place at the remote estate near the Blue Mountains, Det Supt Doherty said.
Police are appealing to anyone who may have seen suspicious activity in those locations.
"We're working on behalf of Charlise. We're trying to provide answers to her family and deliver justice on her behalf more importantly".
