Authorities have not yet positively identified the body but police say he does match the description of the missing swimmer, William Barrientos, 22.
"About 2:15 this afternoon, some kids were sitting on the beach with a bunch of friends and they saw what looked like a body in the ocean, and two males retrieved him and brought him to shore," said Laguna Beach Police Sergeant Jason Kravetz.
The discovery of the body comes after divers spent hours searching the water off of Laguna Beach.
Jesus Romin and his friend were fishing about 6 p.m. Sunday when Romin noticed a man standing near the edge of a cliff called the Table Rock in Laguna Beach.
"I looked down and the waves [were] coming; that's when he jumped," said Romin.
Romin said the man was timing the waves. After about five minutes, when a big wave came in, the man jumped, dropping more than 20 feet into the rough water. The man resurfaced but struggled to keep his head above water.
"He tried to help to us, say help, but nobody helped," said Romin. "But the friend, he jumped in, he can't reach because the waves [were] pretty bad."
Police identified the victim as William Barrientos, a resident of Lake Forest. Police say Barrientos left his wallet and other belongings down on the beach with his friend while he went swimming. Barrientos's friend jumped in to try to help but no one could reach him before he disappeared under water.
"I [was] scared, I'm really scared because I can't do nothing," said Romin.
Signs posted by the beach clearly warn people not to dive into the ocean, that swimming here can be hazardous. But residents say they routinely see the rules being broken.
"I've seen people jumping and I have always worried about it and said sooner or later someone is going to get hurt," said one passerby.
"This whole coast is rocky and dangerous to jump off of unless you know what you are doing," said another passerby. "And probably someone didn't know what they were doing here."
The exact identity of the body found Monday has still to be determined by the coroner.