The Boston command centre was notified at about 12:35 a.m. that the engines on the Liana's Ransom were disabled and its sails wrapped around the mast.
As the weather worsened, two Coast Guard lifeboats were launched to tow the vessel back, but rough sea conditions caused a tow line to break.
The lifeboat crews instructed the crew of the Halifax-based ship to wear immersion suits and the nine people were transferred to the lifeboats.
One man suffered a head injury and was flown to Massachusetts General Hospital by helicopter and the remaining eight crew members were brought back to Gloucester.
A locator beacon was left on Liana's Ransom to be tracked and towed back to port.
The Liana's Ransom website says the 26 metre steel hulled schooner was built in 1998 in Houston, Texas and was sailed home to Nova Scotia in late 2006.
The website says the ship offers day sails and weekly charters for up to 70 passengers and is "crewed by a colourful pirate crew in period costumes."