The men are now safe and the vessel, an 18-metre fishing boat, is underwater in the Strait of Georgia, about five kilometres from the nearest shore.
The Joint Rescue Co-ordination Centre in Victoria says a mayday call was picked up at 5:15 a.m. PT and a number of coast guard and RCMP vessels and commercial boats raced to the rescue.
A tugboat operated by Island Tug and Barge was the first vessel to reach the scene.
John Staynor, manager of compliance for Island Tug and Barge, said tugboat operators used their searchlights to spot the fishing boat and the crewmembers in the water. The tugboat operators then prepared to launch a small rigid-hull inflatable boat to rescue the men.
"Before they were able to get their boat in the water, the Coast Guard was there," Staynor said.
Canadian Coast Guard spokesman Dan Bate said the Coast Guard hovercraft arrived minutes after the tugboat.
"There were two people in the water. They had tied rubber fenders from the boat and had lifejackets on. The boat had at that point, disappeared from the water," Bate said.
"A coast guard swimmer was dispatched and brought both men on board the hovercraft where they were treated for hypothermia."
There is no word yet on why the fishing boat went down.
Rescues in waters off Vancouver have been in the spotlight recently because of the closure of the Kitsilano Coast Guard base.
Critics of the closure have claimed it will dramatically slow any response near English Bay, Burrard Inlet, or Spanish Banks, as the closest base is the hovercraft station in Richmond.
But Staynor said the fact that the hovercraft arrived on scene before his tugboat operators could deploy their rescue boat is significant.
"That was a quick response," he said.
Staynor said his company is "very comfortable" with the Coast Guard's current ability to respond in the area. He said the use of the hovercraft may in fact speed up some responses.
"In this case, the hovercraft is very fast. It has a chance to be fast not only getting there, it has a chance to be fast getting the person to medical help," Staynor said. "You can actually run up on the shore to a waiting ambulance instead of going at a slower speed back to a dock."