"I hope this doesn't affect tourism over the school holidays," one resident who did not want to be named said.

"This is the big school holiday period for the town so I hope it's all good. Hopefully people won't remember this incident for too long."

Another business owner said he was "shocked and horrified".

"It's dreadful," he said.

Another business said they couldn't believe it had happened.

UPDATE, 8.30am: Police sources have revealed that the woman arrested over a man's death in Port Fairy this morning was recently involved in a serious car accident.

It's understood she was only yesterday released from hospital.

At 8.15am: Warrnambool detectives have established a crime scene at the Catalina Caravan Park in Port Fairy.

It's understood Warrnambool police crime investigation unit detectives are in charge of the case until Victoria Police Homicide Squad detectives arrive.

Warrnambool-based crime scene officers are also expected to assist as the investigation phase of the case swings into action.

A woman in her 30s has been arrested after emergency services were called to the caravan park about 2.30am.

Paramedics attempted to revive the man who had suffered injuries, but he was declared deceased at the scene.

Earlier: Police have arrested a Port Fairy woman in her 30s following the death of a man in the town this morning.

Emergency services were called to a Princes Highway caravan park following reports of a man being located with injuries about 2.30am.

Paramedics attempted to revive the man but he was declared deceased at the scene.

The woman in her 30s is currently assisting police officers with their inquiries and investigators believe parties are known to each other.

Homicide Squad detectives are on the way and are expected to interview the woman today.

Anyone with information is urged to contact Crime Stoppers on 1800 333 000 or submit a confidential report at www.crimestoppersvic.com.au

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