Tasmania Police said the 48-foot Beneteau yacht hit a reef on the outer breakwall of Grassy Harbour just after midnight.

The skipper and crew decided to continue their journey, believing there was no damage to the vessel.

Acting Inspector Darren Woolley said the crew began to experience trouble with steering about two nautical miles off the coast.

The crew alerted the Australian Maritime Safety Authority of the steering problems about 1.50am and later upgraded it to a distress call when the yacht began to take on water.

A spokesperson from AMSA confirmed a plane and two helicopters from Victoria were sent to the yacht early Thursday morning.

AMSA also contacted a local fishing vessel, Blue Moon, which was sent to rescue the sinking yacht, then four nautical miles off King Island.

The Blue Moon reached the yacht at 5.30am and transferred all four men to the fishing vessel before returning to Currie where arrangements were made for accommodation, clothing and communication with families.

Police confirmed that none of the crew needed medical treatment.

The yacht sank on Thursday at 10am in 45 metres of water.

Police said it was not considered to be a navigational hazard.

The yacht is unable to be salvaged and a sea safety message has been sent out to mariners in the region.

One of the men was from Victoria and the other three live in Western Australia.

Originally published as Yacht hits reef: sailors rescued by The Advocate.