The Torea hit rock east of Green Island, and a mayday call was issued saying the vessel was taking on water.
The skipper decided the best course of action was to ground the 23.7m vessel on Ruapuke Island around 12.25pm.
A mayday call was issued.
Twenty three passengers and three crew were unhurt in the incident and all accounted for, a Martime New Zealand spokesman said.
A major rescue operation was launched, which included five nearby fishing boats, coastguard vessels from Bluff and Riverton, and helicopters from as far afield as Dunedin, Stewart Island and Te Anau.
The Bluff Coastguard vessel has ferried passengers and crew from the Torea back to Bluff.
The Transport Accident Investigation Commission (TAIC) and Maritime New Zealand are making preliminary inquiries.
