Activist Jamie Moyes, who campaigns with the group Abolish Salmon Farming, said the incident was “nothing new” and locals see blood in the river “all the time”.
Mr Moyes, who lives in Lochcarron, told News locals had seen blood-tainted water coming from the outflow pipe on Kilmallie road, near Caol beach, and shared pictures to social media.
He said they reported the incident to Sepa.
He said: “It’s an absolute horror-show out there. It’s stinking, smelling like rotten fish.
“There were so many scales very heavily concentrated around the area of the outpipe but the blood went the full length of the river.
“Locals have seen blood here before. Things like this happen all the time.”
Following a visit to the site of the incident, Mr Moyes believes the dead fish in the water to be wrasse.
Wrasse fish are used to keep farmed species such as salmon free from sea lice, external and helps minimise the use of chemical treatments.