The lone fisherman, 65, made an emergency call to the Malin Head Coast Guard that his boat was sinking.
The services were alerted shortly after 3pm.
The Coast Guard says the fisherman was able to keep in contact with them – but as the Sligo Rescue helicopter was alerted, his boat sank.
He was able to swim to rocks between Malin Head and Glengad and hold on until the Greencastle lifeboat crew arrived.
He was airlifted to Letterkenny General Hospital as a precaution where he is now being treated for exhaustion and hypothermia.
A Coast Guard spokesman said: “Thankfully the man had a radio and a lifejacket. They undoubtedly saved his life.”
The incident came as the Coast Guard issued a Bank Holiday weekend warning about the dangers at sea.
Met Eireann had a small craft warning in place today.
Earlier this week locals in Rosbeg were hailed as heroes after rescuing four children and four adults off the coast.