The two dead were trainers teaching soldiers how to detect mines in an area where Cambodia's bitter civil wars have left a deadly legacy of unexploded mines.
The accident happened on Thursday afternoon at a military base in Kampong Speu province, according to a police statement released to media.
"The five victims were carrying out training on how to demine, when they detected a leftover mine from the war era," the report said.
"The Cambodian trainer picked it up and it exploded," killing him and an Australian counterpart, the statement added.
Another Australian trainer and two other Cambodian soldiers were injured by the blast but it was not immediately clear how severely.
Police could not be immediately reached for further details.
Cambodia was ravaged by nearly three decades of civil war from the 1960s, leaving the poverty-stricken nation one of the most heavily bombed and heavily mined countries in the world.
Around 20,000 people have been killed there since 1979 and twice as many have been wounded in landmine and unexploded ordnance accidents.
Mine clearing operations started in the 1990s with Western assistance.
Cambodia has taken major steps to clear millions of unexploded bombs but maimings and fatalities are still common with children in particular often unaware of how dangerous such objects can be.
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