The 39-metre yacht My Saga sank at about midday on Sunday while under tow to Cantanzaro Marina in the Gulf of Squillace, Calabria.
The yacht started taking on water at the stern early in the morning and weather conditions worsened. A total of nine people were on board, including seven crew.
My Saga was built in Italy in 2007 under the Monaco Yachting & Technologies brand and was launched as Yuko, superyachttimes.com reports. The steel-hulled superyacht was flying the Cayman Islands flag and she was cruising from Gallipoli to Milazzo with an all-Italian crew.