The dive boat Sabre Two got into difficulty on Sunday afternoon.
Kyle Lifeboat was launched at 14:30 and its volunteer crew went to the aid of the three people with the boat.
The boat was later refloated on a high tide but within minutes it sank. The RNLI crew believed the grounding had damaged the underside of the vessel.
Three people were rescued by the RNLI after their boat ran aground on rocks close to the entrance to Loch Kishorn in the north west Highlands.