The woman struggled to hold her bag. A 10-centimetre knife slash to the heart killed her soon after as the two men sped off empty-handed on a motorcycle about 10.30pm.
Another woman was also slashed on the arm but was treated in a Phuket hospital and allowed to leave early today after receiving stitches to a wound in her upper right arm.
Both women were in a group of 10 travel agents from Perth who had arrived on Phuket on Monday to inspect the five-star Katathani Beach Resort, which dominates the small bay at Kata Noi, south of Patong and Karon, on Phuket's west coast.
The motorcycle pair attempted to snatch the bag in the narrow road outside the resort but fled empty handed, leaving the victims not realising immediately that they had been badly cut.
The wounded woman told police later: ''We were walking single-file along the road, coming back from dinner. These guys had gone past a couple of times, and that started to bother us.
''Then I heard a noise behind me and I turned to see what I thought was my friend being pushed in the chest. I tried to help her.
''The men rode off, empty-handed. We started walking again, and only then did we realise we'd both been slashed.''
One woman died in the road outside the hotel, cut in the heart. Staff rushed to help the other woman.
Two of the travel agents later watched in sorrow, hugging each other and crying, as the body of their holiday companion was shifted from a makeshift resting place in a loading dock at the resort to an ambulance.
Grainy security camera footage captured the men on the motorcycle but the numberplate could not be distinguished. Police believe a particularly sharp weapon was used.
The brutal murder of a tourist will shock the entire holiday island of Phuket, just as it shocked staff and guests at the Katathani last night. The owner of the Katathani, Sombut Atiset, came to see what had happened.
Australian honorary consul Larry Cunningham sped to the Phuket International Hospital in Phuket City to check the condition of the wounded woman before joining Phuket police in interviewing her at the resort.
Australian Embassy officials are in the process of contacting the dead woman's family in Australia.
The Katathani on Kata Noi bay is one of the quieter parts of Phuket, some distance from the noisy swirl of crowded Karon and Patong and one of the least likely places on Phuket for this kind of brutal murder.
Bag-snatching by youths on motorcycles is one of the perils of Phuket, particularly for women out walking in isolated streets. But it was the first time anyone could remember a tourist being killed.
A young German visitor had her thumb cut off in a similar savage incident in Krabi Town, a province nearby, earlier this year. Her thumb was successfully reattached in surgery on Phuket and four youths were quickly arrested and charged.
Lately, talk on Phuket has been about the mysterious deaths of two Canadian sisters whose bodies were found on Friday in a room on Phi Phi, another holiday island a ferry ride from Phuket, or the six drownings of tourists that have occurred on Phuket beaches in the space of one month and a day.
Phuket police are likely to pull our all stops in their efforts to find the killers.
The holiday island made international news in January when Hollywood actor Jeremy Renner was in a group attacked by axe and knife-wielding security guards at a pub in Phuket City.
Prominent Phuket resort owner-manager Vorasit Issara was seriously injured but Renner was unharmed.