All passengers were transferred to patrol boats via the ferry's stern ramp, which is used for loading vehicles, instead of using a gangway.
The ferry was carrying a total of 118 vehicles.
The President of the Republic of Korea, Lee Jae-myung, who is currently on a state visit to the United Arab Emirates, ordered the immediate management of the accident to prevent casualties and to inform the public in real-time about the status of the rescue operations.
South Korean Prime Minister Kim Min-seok ordered the Coast Guard and relevant authorities to immediately deploy all available ships and equipment for the rapid and safe rescue of all passengers.
All 267 people on board a passenger ferry that sank in waters off the western coast of the Republic of Korea have been rescued, the Coast Guard said.
The Coast Guard announced that all passengers and crew members were rescued at 23:27 local time (14:27 GMT), and three of them suffered minor injuries.
A total of 21 crew members remain on board, while the rescued passengers will be transported to the southwestern port city of Mokpo, the Argentina News Agency learned.
The Coast Guard was informed around 20:17 local time (11:17 GMT) that the 26,546-ton ferry sank in waters near an island in the Sinan district, about 310 kilometers southwest of the capital, Seoul.
The ferry, which had departed from the southern tourist island of Jeju, was heading to Mokpo.
The vessel struck a submerged rock while approaching the island.
A fracture was discovered in the bow of the ferry, but no flooding occurred, the Yonhap news agency reported.
Some passengers reported the situation in real-time through their social media and said they were instructed via a public announcement to put on life vests and move to the upper deck after the ship tilted with a loud noise.
The Coast Guard mobilized 17 patrol boats, four coastal rescue vessels, one aircraft, and a special rescue team.