Citing the US Coast Guard, media reports said nine people were missing, while five crew members had survived.
The fire started in the early hours of Monday, while the boat was anchored metres off Santa Cruz Island, about 90 miles (145km) west of Los Angeles.
The Conception – a commercial diving boat – was submerged. The cause of the blaze was not immediately clear.
At a news conference, Sheriff Bill Brown said 39 people were on board the vessel when fire broke out.
What happened on the ship?
Coast Guard services overheard a mayday call at 03:30 local time (10:30 GMT) on Monday, saying that the boat was engulfed in flames. Reports suggested some passengers could have been trapped below deck.
Those who escaped the fire may have been sleeping in the main cabin of the boat rather than below. They were awake and had jumped off the boat’s bridge before a Good Samaritan vessel called The Grape Escape arrived to rescue them.
The Associated Press news agency and CBS news cited Coast Guard officials confirming 25 deaths.
The owner of the Grape Escape, Bob Hansen, told the New York Times that the boat was engulfed in flames, “from stem to stern”.
“I could see the fire coming through holes on the side of the boat,” he said. “There were these explosions every few beats. You can’t prepare yourself for that. It was horrendous.
Sheriff Brown said that oxygen or propane tanks could have exploded during the fire, but there was no sign this sparked the blaze.
“Nothing in the [mayday] broadcast from the vessel… indicated there was an initial explosion,” he said.
Capt Rochester said the boat was “fully in compliance” with safety regulations, and had no prior violations.
Sheriff Brown said the fire was “probably the worst case scenario you could possibly have” on a vessel, as it was in open water at night with most people asleep below decks.
“Fire is the scourge of any ship,” he said. “Of all scenarios… you couldn’t ask for a worse situation.”
The Conception sank 20 yards (18m) off the north shore of Santa Cruz Island, at the depth of 64ft (20m).
Run by a diving company called Truth Aquatics, which has a 4.5 rating on Trip Advisor, Conception was used for chartered trips in the Channel Islands National Park. It was on the final day of a three day scuba diving excursion for the Labor Day weekend.
The boat’s layout shows three rows of double bunks with a shower room at the front of the boat. “Pillows, blankets, reading lights, privacy curtain and personal storage are provided,” the company’s website said.