According to witnesses, two people immediately went under when the small leisure boat capsized as harsh winds swept across southern parts of Sweden late on Wednesday.
“The third person clutched on to the hull, but the current pulled him with it too,” Johan Wallin, head operator at the Fire and Rescue Services, told the Expressen tabloid.
Divers, boats and a helicopter were called to the scene after the incident at around 7pm last night.
Clothes and fishing gear believed to belong to the boat's passengers was found in the water but there was no sign of the missing people, believed to be three males.
The search was stood down at around 10pm and was resumed early on Thursday morning.
Several friends and family members of the group continued to search for the men throughout the night.
“We won't stop until they are found,” a relative told Swedish tabloid Aftonbladet late on Wednesday.
According to Swedish news agency TT there is little hope of finding the men alive.