Up to four people have been swept down the Waikato River, north of Taupo.
A staffer at Huka Falls River Cruise told the Herald that three of the four had been found.
She said the group were swimmers "in bikinis and togs", in their early 20s.
"Three of them are down at the dam and there's one still missing, there's a helicopter up looking."
Police and Search and Rescue personnel are at the scene. An ambulance is waiting at the scene.
Police were notified at 12.10pm that the four had been carried down the river.
Power authorities open the Aratiatia Dam floodgates upstream several times a day. In the summer, they were released at 10am, midday, 2pm and 4pm. A siren sounds before the water is released.
The Huka Falls River Cruise worker said the river is transformed from being "very calm", to intense rapids.
'No swimming' signs are in place, she said.
"These people obviously didn't read the signs saying don't swim beyond the rapids and went swimming," she said.
"When the water was released at 12pm, the water came down and flooded river and swept them away."
She said three of the swimmers made it to the safety of the riverbank.
They were speaking to police while the search continued.
They declined to comment when approached by the Herald, saying that family is yet to be notified of the incident.
Today's 2pm water release has been cancelled.
The event is a popular tourist attraction.
The rapids were also made famous by Sir Peter Jackson's film, The Hobbit: The Desolation of Smaug where the dwarves, hiding from the Elves in barrels, were thrown into the river.