The boat, which was on a day trip to the popular Tortuga (Turtle) Island, sank completely about 15 kilometres off the country's central Pacific Coast.
Firefighters Corps director Hector Chavez said initial reports of an explosion and fire were mistaken. Survivors reported that strong waves filled the boat with water and caused it to sink, he said.
Chavez said three people died. The Public Security Ministry said in a Twitter posting that the victims were a U.S. citizen, the Canadian and a man from Britain.
There were no further details on the Canadian. Canada's foreign affairs department confirmed a Canadian had died but could not provide further information citing privacy concerns.
"Canadian consular officials in Costa Rica are in contact with local authorities and are providing consular assistance to the family during this difficult time," the department said in an email.
It was not immediately known if any other Canadians were on board the catamaran.
Vice-President Ana Helena Chacon said at a news conference that 106 people were rescued, meaning all of the cruise's 99 passengers and 10 crew were accounted for.
"We want to extend our condolences to the victims' families," Chacon said.
The National Meteorological Institute had issued a warning about strong winds buffeting the country this week, but authorities said the boat was properly permitted and authorized by the port captain to set sail.
Private boats in the area took in passengers until rescuers arrived. They were later transported to two emergency centres on shore.
The tour operator reported that the Pura Vida Princess, a 100-foot catamaran, left Marina Los Suenos on Thursday morning.
According to the Pura Vida Princess website, the Tortuga Island day trip costs $125 and includes meals, a DJ, snorkeling and open bar.
With files from The Canadian Press