"The situation looks serious", said an official with the Antioquia government. Authorities dispatched helicopters to evacuate the passengers that were seriously injured.
The four-deck ship called Almirante went down Sunday afternoon. A few of the passengers have told local media that they were not given life vests when they got on the boat.
Video circulating on social media shows the ship going down and dozens of other vessels approaching it to try to rescue people.
But later Sunday President Juan Manuel Santos arrived to Guatape and said 122 people were either rescued or found their way to shore.
"Nobody really knows what happened", said Santos, adding that naval officials were brought in to carry out an investigation and divers would continue searching for people all night.
"I have been informed that the boat had a capacity greater than the number of people on board, so that it was not due to overloading" that the craft sank, he told reporters while visiting the scene of the sinking. Rescue operations were immediately undertaken, including deploymnt of firefighters and air force pilots.
"We were taking photos, seeing that it was a very lovely day when from one moment to another we felt a very strong rumble", Jose Gilberto Villegas, a survivor of the tragic incident, said, adding "the left part was broken and it was when the ship began to sink towards the left side".
A local vendor told the Caracol News network that it was not the first time the boat has sunk.
Rescuers wait at the dock after a tourist boat sank with 150 passengers onboard at the Guatape reservoir, Colombia. "The owners fixed it and it continued to operate", said Marylin Usme.
Medellin's mayor Federico Gutierrez said he is sending a team led by a firefighting crew captain and five scuba divers. Rescue crews were sent to the area shortly after the accident. And it was packed with tourists on Sunday as this weekend was long one, the Associated Press (AP) reported.
The head of the disaster response agency in Colombia's Antioquia state says that nine people are dead and around 28 missing after a multi-story tourist boat capsized near the city of Medellin.
Guatape is a popular Andean resort town, known for its water sports and recreational activities.