The Northern Ranger has been docked at Happy Valley-Goose Bay since Monday, stranding about 70 passengers, including children returning to school and workers who had been heading back to their jobs.
CAI Nunatsiavut Marine, which operates the vessel for the Newfoundland and Labrador government, chartered three Twin Otter aircraft and flew all of the stranded passengers to their respective communities on Tuesday night.
"This is an occurrence that no one could predict," said company official Chris Newman.
The Northern Ranger, which can carry a load of 131 passengers and about 100 tonnes of freight, runs from Happy Valley-Goose Bay to such communities as Nain, Natuashish and Makkovik.
With the problems affecting the ship's main gearbox, the ferry will need to be out of service for an indefinite period of time.
The company said it is looking for a replacement vessel, although that work could take at least a week.
Repairs to the Northern Ranger itself could take weeks to complete.