This snopes article says it's a true story. Sort of.
http://www.snopes.com/photos/bearhunt.asp#photo
It contains the rather alarming picture that fotze linked to above so if you don't want to see something nasty, don't click it.
Basically it says that guy in the picture is a hunter and he shot a really big bear. The photo makes it look bigger than it really was, but it was still enormous. Some other link above says it was actually 10'6 from nose to tail and up to 1200 pounds. Got a tape measure handy? I don't know what that means "standing up" but it must be pretty damn tall The man-eating and the 12' foot tall 1600 pound numbers were wrong.
So it seems it's an internet hoax, but only sort of. I don't know why someone would exaggerate a 10'6, 1200 pound bear, but it seems they did.