The US Coast Guard confirmed rescuers pulled more than 30 people from the water and Ventura County Fire Department officials told KTLA that 34 people had died.
The vessel reportedly caught fire near Platts Harbor on Santa Cruz Island in the middle of the night while passengers were sleeping.
Emergency crews received a call just before 3.30am local time on Monday, and rescue efforts involving multiple agencies and personal watercraft were still underway as of 6.30am PST.
Ventura County PIO spokesman Bill Nash said the death toll is unclear but there are believed to be 'numerous' fatalities.
'It's a large boat, and we know we have numerous fatalities. I don't have an exact number,' Nash told CNN.
He said the fire was about 20 miles off the coast of Channel Islands National Park.
'We are not sure where it falls jurisdictionally; it's Coast Guard, Santa Barbara or Ventura,' he said.
'Where that plays in, after we figure out what we've got, it’s where to transport the bodies.'
The boat, dubbed Conception, is believed to be owned by diving company Truth Aquatics.
It reportedly departed from Santa Barbara Harbor on Friday night for a Labor Day weekend trip to the pinnacles of San Miguel Island and was expected to return Monday evening.
The boat has sleeping space for 46 passengers.
The Ventura County Fire Department tweeted two photos of Conception up in flames as rescuers worked to remove everyone onboard.
'More details will be available later as this operation continues.'
USCG Los Angeles confirmed the incident on Twitter at about 5.30am, writing: 'The Coast Guard has launched multiple rescue assets along with assets from local agencies to assist more than 30 people in distress on a 75ft boat near Santa Cruz Island.