Another man was pulled from the water off Ardnamurchan Point but his condition is not known. A fourth man is still missing. A member of the public spotted the boat capsize near Bo Fascadale, about 1.5 miles north of Kilmory, Ardnamurchan, at about 1710 BST.
Two helicopters, a lifeboat and several other vessels are involved.
By 1815 BST one man had been pulled from the water by a yacht, the "Arran Comrade", which had responded to a coastguard mayday call, and a search began for the other three.
Two of the others were later recovered from the water but, according to Northern Constabulary, were dead on arrival at hospital.
The fourth man remains unaccounted for.
A coastguard spokesman said the man pulled from the water by the yacht crew had not been wearing a lifejacket.
He was transferred to a lifeboat - and taken to Broadford Hospital on the Isle of Skye.