Anita Board was on a practice run in her dragster "Pony Power" when she hit a cement barrier at the end of the run in the city of Perth, they said.
The girl was taken to hospital in critical condition and died on Sunday, the police said in a statement.
"Tragically, the eight-year-old girl involved in a crash at the Kwinana Motorplex... has died as a result of the injuries she sustained," the statement said.
Police said they were investigating the cause of the accident.
Her father, Ian, posted a message overnight on the family's Facebook page saying "my heart [is] in a million pieces".