Two people have been confirmed dead, with 300 people still missing - as many are feared trapped within the vessel.
The boat was sailing to the southern island of Jeju, carrying over 400 passengers, when it began leaning to one side and sent out a distress call.
A total of 16 helicopters, 34 rescue vessels and navy divers were sent into the area to help recover survivors.
Student Lim Hyung-min, who was on the boat with friends, said he jumped into the ocean wearing his life jacket and then swan to a nearby rescue boat.
He said the ocean 'was so cold…I was hurrying, thinking that I wanted to live.'
The ocean temperature in the area is estimated at around 12 degrees Celsius - cold enough to give you hypothermia after about 90 minutes.
Another passenger reported hearing a loud noise before the boat stopped, though it is still unclearat this stage what caused the vessel to capsize.
The rescue effort continues.