The two-year-old gelding named Tamworth survived the virus that claimed four other horses at Redlands Veterinary Clinic on Brisbane's bayside.
A vet and a nurse from the clinic remain in hospital in a serious condition with symptoms of the Hendra virus, which killed horse trainer Vic Rail in 1994.
Tamworth, the horse was given a lethal injection, a Queensland Department of Primary Industries spokesman confirmed.
Experts from the Australian Animal Health laboratory in Geelong are conducting a detailed post-mortem examination.
Government veterinary chiefs defended their order to euthanise Tamworth, even though the horse had recovered.
Queensland's Department of Primary Industries had wanted to keep the horse alive for a year to study how it had beaten the deadly virus. But Australia's acting chief veterinary officer Reg Butler said Queensland's Health Department had insisted the horse be put down.
"The chance is that the virus is still in (the horse's) body and it will come down with the disease at a later time, excrete the virus and people will get sick," Dr Butler said.
Biosecurity Queensland chief veterinary officer Ron Glanville said there was no option but to put it down.
"This is one of the world's deadliest viruses ... we know a percentage of recovered animals continue to carry the virus, but we don't know what proportion that is," Dr Glanville said.
"But we certainly know that it happens and there have been reappearances of the virus and that is a real risk."
Tamworth was put down against the wishes of owner Warren Small, who was not convinced his horse was a threat.
Under Queensland exotic disease laws, Small is not entitled to compensation, but he said he was looking at pursuing the matter through the courts.
"My horse would not have contracted the virus if the clinic had followed the correct system," Small said.
"It was put in the same stable three hours after a horse died of the virus.
"I'm asking the DPI for an inquiry to find out who is accountable."
Dr Ron Glanville said regrettably 'Tamworth' had to be euthanased to eliminate any future threat.
He also affirmed that the case was unrelated to the cases at the vet practice near Brisbane.
Glanville said a local vet reported the horse's unusual symptoms on Friday, with samples sent for priority laboratory testing on Saturday.
"There are more than half a million horses in Queensland and although Hendra cases are still rare, some cases are expected periodically," Dr Glanville said.
"Fortunately, Hendra virus does not spread like equine influenza, and is very difficult to catch.
"The horse at Cannonvale has no connection to the vet practice in Brisbane, and all scientific evidence at the moment points to the timing being a coincidence.
"The recent news coverage of Hendra virus prompted the local Cannonvale vet to call Biosecurity Queensland, and I applaud this foresight."
Dr Glanville said this is not the first time that Queensland has dealt with two unrelated cases of Hendra in the same year.
In fact, it has occurred four times previously since 1994.
"Every new case and new piece of information helps to increase our scientific understanding of this rare disease," Dr Glanville said.
Biosecurity Queensland officers are investigating the Cannonvale property this morning.
It will be placed under routine quarantine.
Further testing of other horses at the Redlands, Brisbane, vet practice is continuing.
The latest round of tests have been negative for Hendra virus and there have been no further signs of illness.
Hendra is a rare virus that affects horses. This is only the 11th known incident in Queensland.
Dr Glanville ruled out a departmental inquiry into the Brisbane clinic to discover how the virus was transmitted between horses. He said any inquiry would have to be carried out by the Veterinary Surgeons Board, of which, ironically, the clinic's owner, Dr Lovell, is a member.
Warren Small says the staff and owners of the horses deserve answers.
"We're personally devastated about [it] but it's been done, so now we've got to follow the next steps," he said.
"We have to get a full inquiry because not only myself, but there are a number of people really upset about this veterinary clinic."
Small had originally refused to comply with an order from the Department of Primary Industries to destroy his horse which was worth about $200,000.
Citing commercial confidentiality, the Queensland Government is refusing to say how much it has paid vet David Lovell, who claims the quarantine lock-down on his clinic will cost him $500,000.
Dr Lovell shrugged off the complaints.
"Anyone's entitled to challenge anything we do and we're very confident that anything we are doing is above industry standards," Dr Lovell said.
He refused to say how much the state Government was paying him in compensation.
"In effect they've sequestered the place as a quarantine station and prevented me from doing any work. They're effectively renting my property."
Dr Lovell hoped the quarantine of his clinic -- and the 35 horses still there -- would be lifted next week.