The group, which included two children, made a 999 call just seconds before their 18 ft vessel sank – about half a mile off-shore around 4.30pm.
The group were all rescued in the water when the Malin Head Coastguard Rescue put out a mayday call to all vessels in the area to respond.
A call was also made to the Search and Rescue helicopter based in Sligo but it was in Knock and would have needed to refuel.
Two boats, the ‘Blue Haven’, a rib and ‘Our Jenna’, a fishing vessel responded to the call and were within the scene in minutes.
The Blue Haven was manned by a lifeguard crew member from Newcastle in Co Down who pulled the six from the water.
All six people had been wearing life jackets.
One of the children, a four year old girl, was taken to hospital as a precaution but her conditions is said to be comfortable.
None of the other five people who were rescued had to receive any treatment.
A spokesman for Malin Head Coastguard Rescue said all six people on board the boat, between Portnablagh and Marble Hill, had a very lucky escape.
“They contacted us with a 99 call to say they were taking in water but then the phone was cut off.
“We feared the worst and put out a mayday to all craft in the area. Luckily two vessels were close by.
“One of those vessels contained a member of the coastguard form Newcastle in Co Down so he knew what he was doing.
“When he got there they were already in the water and the boat, a 18ft Fletcher speedboat, was submerged.
“He managed to get all six people on board and they are safe,” he said.
The coastguard spokesman praised the quick response of the vessels and also pointed to the fact that all six people onboard were wearing lifejackets.
“Who knows what could have happened if they had not been wearing lifejackets. There’s no question there is a lesson for all of us there,” he said.