Another image shows a group of men smiling as one holds up the dead bird by its neck.
One man reportedly told AAP that the bird was "dead when we found it", as he attempted to stop his friends from brandishing its body for the camera.
The pictures have sparked fierce backlash, with social media users calling out the people involved as "sick" and "cruel".
"How proud these low-lives must feel they achieved nothing but to attach to their name killing an innocent owl," one person wrote on Facebook.
Another added: "What the f**k is wrong with people. First emus, then kangaroos, now this. It's disgraceful and unAustralian."
However, there were some users who thought the outrage was an over-reaction.
"The owl was already dead, yea they are d**kheads but seriously before we start getting the pitchforks and flaming torches out, how many people died of drug overdoses," one person wrote.
"If the worst thing to happen at Deni is a couple of d**kheads disrespect a dead owl, well at least no human died."
NSW Police told news.com.au that the majority of festivalgoers were well behaved, with just six people out of thousands having charges laid against them.
"Police have praised the good behaviour of the majority of attendees during the high-visibility operation at this year's Deniliquin Ute Muster," a NSW Police spokesperson said.
"During the operation, police charged six people with various offences.
"Of note, a 17-year-old boy from Oak Flats was arrested by police on Friday.
"Officers searched the boy and allegedly located an amount of ecstasy and cocaine. He was charged with supply prohibited drug (indictable quantity), and two counts of possess prohibited drug."
The boy was granted conditional bail and will appear in children's court next month.
Officers also conducted more than 1590 random breath tests and issued 17 speeding infringements.
Fire trucks were also called out to the event to help contain blazes lit by attendees.
Campers are allowed to have fires so long as they can be contained in a 44-gallon drum.
Pictures from the event show groups gathered around large flames and thick black smoke, as firefighters work to contain multiple blazes.