The 36-foot Trojan vessel was already in distress and being towed by a good Samaritan boat when Orange County sheriff's deputies arrived on the scene outside Newport Harbor around 2:45 p.m.
The boat was sinking quickly and was almost submerged when all 14 passengers jumped into the water.
They were pulled from the water by the Harbor Patrol, Newport lifeguards and good Samaritan vessels.
The cause of the sinking remains under investigation.