The 60-year-old man was decapitated by an unidentified assailant, armed with a large bush knife, a church worker said by phone Monday.
Lance Gersbach worked as business manager for an 80-bed hospital run by the Seventh Day Adventist Church on Malaita, one of the larger islands in the Solomons archipelago situated east of Papua New Guinea.
Once known as the "Happy Isles," the impoverished Pacific nation has been wracked by factional violence in recent years.
George Fafale, a Solomon Islander who has worked for the Adventists for 23 years, said from Malaita that Gersbach and two local men had been working to clear brush from a site where the hospital plans to build a store to serve the needs of visitors to the hospital.
Around noon, the local men left for a while, and Gersbach continued working alone when he was attacked, apparently from behind.
The assailant apparently used a machete of the type being used to clear the bush.
Fafale said a dispute existed over the land, which was being leased by the hospital. He did not elaborate.He described the Seventh Day Adventists as one of the largest churches on Malaita, the Solomons' most populous island with around 120,000 inhabitants. The denomination runs schools there as well as the hospital.
Gersbach, an accountant from Western Australia, moved to Malaita earlier this year with his wife, Jean, and his two young daughters, for a 12-month stint as a volunteer.
Bronwyn Mison, communication director for the Adventists in the South Pacific, said in a statement the church was doing all it could to support Gersbach's family and hospital staff.
Working together with the Australian diplomatic mission in the Solomon Island, the church chartered a plane to fly his widow, Jean, and their daughters to the capital, Honiara.
Mison said Gersbach had in the past worked at a church-run hospital in Papua New Guinea for three years.
"Lance had a keen interest in helping others," she said.
A friend of the victim, Adventist pastor Larry Laredo, said from the Australian city of Perth that Gersbach was a likeable man, strong yet gentle.
The church would have turned down many applicants wanting to go to what is regarded as a risky region, but had not hesitated with Gersbach, he recalled.
"Lance was a very strong person, very balanced. He wouldn't hurt a fly yet was strong physically and mentally. We expected he'd be okay, but of course in Third World environments these things happen - one way to solve problems in some cultures is to kill somebody."
Laredo said other Adventist missionaries had died violently in the Pacific in past years.
A former British protectorate with a population of less than 500,000, the Solomon Islands became independent in 1978.
Factional violence simmering for half a century has worsened in recent years, with hundreds killed in fighting between militias - at times armed with machetes - based on Malaita and the main island, Guadalcanal.
Guadalcanal was the scene of fierce battles between U.S. and Japanese forces during World War II