A yachtie has described the desperate moment his crew tried to save a Kiwi woman who died when two boats collided in the America's Cup host country Bermuda.

Denis Owen, owner of local charter vessel UberVida, told the Herald crew members onboard his yacht found 62-year-old Mary Elizabeth McKee unresponsive in Hamilton Harbour on Thursday night (local time).

McKee was onboard a 9ft Zodiac inflatable boat with her 69-year-old husband and a 26-year-old British man, all of whom were visitors to Bermuda, when it collided with another vessel.

McKee died from her injuries.

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Her husband and the British man were seriously injured and are fighting for their lives in intensive care at King Edward VII Memorial Hospital.

UberVida had just docked after a private charter when a distress call came over the boat radio at about 10pm.

"The helmsman heard the call and came off the dock and went to help search for a person that was apparently lost," Owen said.

"[The crew] found the person in the water face down."

Crew members jumped in the water and pulled McKee up on to the yacht. She was unresponsive.

Owen said a crew member started CPR as another person onboard tried to stop McKee from bleeding.

UberVida made their way back to the mainland where ambulances were waiting.

"A paramedic came onboard the boat and pulled her off," said Owen.

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Although Owen was not onboard at the time, he arrived at the dock as UberVida pulled up.

He said he was very proud of his crew's efforts but was upset with the outcome.

"Seeing as the result was not a positive one it's not such a huge great feeling. Our condolences go out to her family."

Owen held a meeting with crew following the tragic incident.

"Our crew members were quite shaken up afterwards.

"We came to the conclusion that absolutely everything they did was 100 per cent spot on.

"Absolutely everything that could have been done was done. As fast as possible as well."

A member of the McKee family, who asked not to be named, told the Herald the family is "pretty cut up" and didn't want to speak about the tragedy.

The America's Cup is being held in the Great Sound, which narrows to form Hamilton Harbour where the tragic incident happened.

It is not yet clear whether McKee was in Bermuda for the America's Cup.

Local police said in a statement that a 26-year-old local man allegedly driving the other boat, a 17 ft. centre console vessel, had been arrested for alleged impaired operation of a watercraft.

He passed a breath test but remained in custody pending further inquiries.

Calling it a "sad and tragic event", Minister of National Security Jeff Baron extended condolences to the family of the victim.

"I wish to stress that the public safety of all attending the various events across our Island is of paramount concern for our security services personnel and we continue to encourage care and caution during this very busy time in Bermuda."

A spokesperson for the Ministry of Foreign Affairs and Trade said they were aware of the death of a New Zealand woman in a boating accident in Bermuda.

"The Ministry is providing support to the family and will continue to assist them at this time.

"The family have requested their privacy be respected."

A forensic pathologist was expected to arrive on White's Island to assist with the investigation, according to Bermuda News.

Detectives were actively investigating the incident and are appealing for witnesses or any persons with information to come forward.