Two neurosurgeons met at a hospital, formed a "deep emotional bond" and began taking the party drug GHB together on weekends.
In 2013, the junior doctor died of a heroin overdose after planning to quit GHB, and the senior doctor has now been suspended for three months.
The case before the Civil and Administrative Tribunal, which examined the ethics and risks of doctors taking drugs outside work hours, has been brought to the attention of the NSW Health Minister.
"The tribunal has heard alarming evidence suggesting the widespread consumption of drugs both by qualified medical practitioners and by nursing staff, albeit such incidents occurred in social settings," said the tribunal's judgment, published on Wednesday.
"The tribunal's concern relates to the potential danger to patients as a result of the residual effects of drugs taken by practitioners and nursing staff."
The tribunal heard that a specialist neurosurgeon, given the pseudonym DAC, developed an "unconditional infatuation" with the junior neurosurgeon, known as Dr A, and they used GHB, also known as "liquid ecstasy", outside work and on weekends.
Both also used other drugs, including cocaine and ecstasy, while socialising.
In the first few months of 2013, Dr A's colleagues noticed he was tired and was "not coping as well as well as he had".
The neurosurgeons realised they had became dependant on GHB and planned to quit with the assistance of anti-epileptic drug Lyrica, but Dr A died of a heroin overdose.
The Health Care Complaints Commission accused DAC, who continues to work at a public and private hospital in NSW, of several counts of "unsatisfactory professional conduct"
DAC was accused of taking the illicit drugs between October 2012 and February 2013, failing to encourage Dr A to seek professional treatment, and failing to report Dr A for working under the effects of GHB.
He denied knowing Dr A was under the influence of drugs at work, but the tribunal pointed to WhatsApp messages between the two that suggested he did.
On the afternoon of April 9, Dr A sent DAC a message saying: "Thanks man, how much you had today? I just had 0.5. Not unhappy with that."
Records showed Dr A had just finished assisting in surgery at that time, and there was no dispute "0.5" referred to an amount of GHB.
DAC was also found to have lied to a Medical Council hearing when he said he did not notice any withdrawal effects of GHB.
But in a WhatsApp message sent in April, DAC wrote: "I am withdrawing like a motherf---er and I don't know what to do."
DAC was found guilty of unsatisfactory professional conduct, suspended for three months, and has numerous conditions on his future registration.
The tribunal emphasised there were no allegations of malpractice against DAC.
"There is no suggestion that his practice of medicine, or patient care or safety, have been compromised as a result of actions detailed in the complaints."