A State Police spokesman says divers discovered the body Tuesday afternoon in Budd Lake in Mount Olive Township.
The effort had switched from a search to a recovery mission earlier in the day.
Search teams continue to search for the second teen.
Police received reports of screams for help coming from the lake around 6:20 p.m. Monday.
Acting Morris County Prosecutor Fredric Knapp said two residents went out on a boat, but failed to find anyone.
Rescuers broke through more than 100 feet of ice and a state police helicopter illuminated the scene before the search was called off Monday night.
Police have not released the identity of the teenagers but rescue workers are in touch with their parents.
Several people in the area said they were on the lake over the weekend and it seemed the ice was thick enough to support them.