The animals are brutally caught and then butchered not far from the beaches visited by more than 1 million Australians every year.
Some of the animals are poisoned, posing a risk to human health, according to a leading toxicologist.
Whilst eating dog meat is not illegal in Bali, killing animals cruelly or eating meat contaminated with poison is against the law, Animals Australia's campaign director Lyn White said.
"The dog-meat trade breaches animal cruelty laws and food safety laws. That is a statement of fact," she said.