The small panga carrying three Mexican nationals was on its way to Huntington State Park about 8:30 a.m. Sunday when lifeguards spotted it and called authorities.
Officials said the men shoved at least one package into the ocean before being confronted by sheriff's deputies. Deputies stopped the boat at gunpoint about a mile offshore from the Newport Beach Pier and took them into custody.
"The three men noticed the lifeguard and police trucks on the beach, so they went back out to sea and began throwing things into the water," Orange County Sheriff's Department spokesman Jim Amormino said.
Authorities combed the waters for a package seen thrown from the boat.
The trio was arrested on suspicion of drug possession, smuggling and attempting to enter the United States illegally.
The 25-foot boat, which was reported stolen in Mexico, was towed to Newport Dunes and impounded as evidence.
Investigators said drug smuggling along the coast is a growing problem in Orange County due to tighter security at the U.S.-Mexico border.
Sgt. John Hollenback of the Orange County Sheriff's Department said smugglers have been loading up with extra fuel, food and water in preparation to move 25 to 50 miles offshore where it's more difficult to detect them.
"Usually they try to come ashore at night under the cover of darkness, they've come ashore under very stormy and bad conditions where it's very difficult to see them," Hollenback said. "It's very unusual that they tried to come ashore in broad daylight on a weekend when plenty of people were at the beach."
City News Service contributed to this report.