An Indigenous Canberran has passed away whilst in custody in a New South Wales prison after medical advice about his mental health was ignored.

The ACT Government was notified of the man's death on Monday.

The news of the death of TJ Dennis prompted Winnunga Nimmityjah Aboriginal Health and Community Service Chief Executive Officer, Julie Tongs, to call on the ACT Government to commission an independent inquiry into the death.

The loss of life comes as the ACT Government reviews incarceration rates following a scathing report by the Productivity Commission, which revealed that ACT has Australia's worst gap in incarceration rates between Indigenous and non-Indigenous residents.

Despite Mr Dennis' involvement with the criminal justice system, Ms Tongs said he was a man who was loved by almost all who met him and took the time to know him.

She said his death came as a dreadful and deeply distressing shock not only to her, but to the broader community.

Ms Tongs said ACT Corrective Services had ignored recommendations made by medical and professional staff at Winnunga in relation to Mr Dennis' care.

A recommendation that Mr Dennis be admitted to Dulwah, Canberra's Mental Health Facility was also ignored.

The failed efforts to provide Mr Dennis with the mental health support he required through Dulwah, only adds to the growing number of concerns about the state of Canberra's Mental Health services.

"We wanted him to go to Dhulwa (Secure Mental Health Unit) but they wouldn't take him," Ms Tongs said.

Following this failed attempt at ensuring Mr Dennis received the right medical treatment, Winnunga staff were advised he would be moved to a New South Wales prison.

Winnunga staff then advised ACT Corrective Services that the only appropriate placement for Mr Dennis would be at the forensic mental health facility at Long Bay Gaol.

This recommendation was also ignored.

Ms Tongs said Mr Dennis was then placed in the NSW prison system, where he spent time across multiple prisons in the state before passing away whilst detained in Silverwater Prison.

Prior to his tragic death, which has been reported as a suicide, Mr Dennis was the victim of a racist and unprofessional game of hangman, where he was allegedly depicted as the hanged man.

Ms Tongs felt the decision to move Mr Dennis from the Alexander Maconochie Centre (AMC) was influenced if not driven by this racist incident.

A spokesperson for the ACT Government said they acknowledged the "terrible sadness of the death of a man in NSW".

"The man requested to be transferred to NSW. In the interests of the man and after careful consideration, the transfer was facilitated under s26 of the Crime (Sentence Administration) Act 2005," the spokesperson said.

"Our thoughts and condolences are with the deceased's family and friends."

In a statement released to media, Ms Tongs said Mr Dennis' death was a preventably tragedy.

"TJ's death was not only predicable it was avoidable if only the ACT Government had listened to the voices of those who sought to care for and/or who loved him," she said.

Ms Tongs also called for an independent inquiry into Mr Dennis' death, specifically focusing on decisions relating to his mental health.

"It is imperative that there be an independent inquiry into all the circumstances of TJ's incarceration and treatment and care in the AMC, including the decision against the advice of his medical advisors to transfer him and/or detain him in a prison and not a forensic mental health facility."