The Erik, a 115-foot tourist fishing boat carrying 44 people aboard, sank Sunday morning about two miles off the coast of the Baja California port of San Felipe. More than two dozen Americans were on board the boat.
Officials said two giant waves hit the boat, causing it to tip over.
Some passengers and crew members clung to coolers, rescue rings and life vests for nearly 10 hours before being rescued by another fishing boat. Others managed to swim to shore and alerted authorities. They were taken to a clinic for checkups, then to their hotel.
"Passengers were in the water for over 16 hours and eventually were rescued by local fishermen and the military," said Charles Gibson, a survivor from Belmont, Calif.
By Monday afternoon, rescuers had recovered all of the crew, but the search continued for seven missing tourists.
Capt. Benjamin Pineda Gomez in the Baja California port of San Felipe had no name or details about the man who died.
The U.S. Coast Guard and Mexican navy are scouring the sea of Cortez by boat and helicopter for the missing.
The boat left San Felipe on Saturday carrying 17 Mexican crew members and 27 American tourists mostly from Northern California for a seven-day fishing trip, officials said.
The Erik has taken thousands of guests on the Sea of Cortez since 1989.
"The boat always seemed rather stable to me" said Fallbrook resident George Ruble, who has been on the Erik before. "I certainly wouldn't have taken any people on a trip if I didn't feel it was safe to begin with. I've been on that boat with some pretty rocky weather and never experienced anything more serious than waves breaking over the bow and you'd get wet."
San Diego-based Baja Sportfishing Inc. has cancelled all scheduled trips.
The Associated Press contributed to this report.