Annabelle Falkholt, 21, was pulled from the wreckage alongside her actress sister Jessica, 28, after their car collided with a four-wheel-drive near Ulladulla, killing their parents.
Annabelle was flown to Liverpool Hospital in a critical condition after the crash but died as a result of her injuries on Friday, police say.
Jessica, who has played a role in Home and Away and other Australian television series, is still clinging to life in St George Hospital in a critical condition, a hospital spokeswoman told AAP.
The sisters' parents, Lars and Vivian, died in the crash, along with the driver of the four-wheel-drive - 50-year-old Craig Whitall.
It emerged following the crash Mr Whitall had been jailed for driving while disqualified and had only recently got his licence back when the crash occurred, according to News Corp.
His criminal and drug use history also came into focus after it was reported he was on his way home from a methadone clinic in Nowra when the crash occurred.
Mr Whitall's son Shane told 7News that he was an "awesome father".
"I couldn’t ask any more of him. He did what he could and that’s all you can ask for anyway – do the best that they can, and in my eyes, he did more than that. So he was my hero and my idol.”
His mother, Trish, expressed concern over what was being reported about her son.
“It’s very hurtful for me to think that they’re talking about Craig like that because he was very private; didn’t like people talking about him. The worst part is that he’s got grandkids that can read… They’re listening to it.”
She added that she wanted to give the Falkholt family her “heartfelt commiserations”.
“We don’t know for sure where [Craig] had been or what he was doing, but if he was on medication, that would be his business and no-one else’s.”
The state's Christmas road toll now stands at 23 after a motorcyclist died at Queanbeyan on Thursday night.
Police have vowed to get every possible highway officer on the roads to bring the spiralling toll under control as they prepare for another spike in traffic around New Year's Eve.
