A Maritime New Zealand Rescue Co-ordination Centre spokesman said the centre was made aware of a distress call via maritime radio, coming from a vessel about one nautical mile off the Tautuku Peninsula at 11.30am.
The crew also activated an emergency position indicating radio beacon to assist the searchers in finding their location.
There were two people and a dog on board the vessel when they had to abandon it.
Weather conditions at the time were wet and windy, and there were strong swells.
An Otago Regional Rescue Helicopter arrived on the scene 55 minutes later and the crew identified two people in a life-raft.
A winching operation began and the two were lifted on board with their dog.
The boat later sank.
The spokesman said the two crew members of the vessel were not injured, but were taken to Dunedin Hospital as a precaution.
He declined to name the vessel, or say whether it was a private or commercial vessel.
He said it was not yet known what caused the sinking, and an investigation into the incident had been launched.
The boat is believed to be Aurora 7459, a fishing boat which was accused of dumping fish waste overboard in Caroline Bay, Timaru, in January.
It was to be investigated by the Environment Canterbury Regional Council.
The vessel and its registered owner could not be found on the Maritime New Zealand website.
