New footage shows the shocking moment a ferry and yacht collided in Sydney Harbour.

The video, taken by a ferry passenger, shows the boat approaching a yacht ahead, which appears to begin to turn.

People on board the ferry appear unaware of the looming crash until just before it happens, when they begin calling out.

After the crash, screams can also be heard.

The yacht drifted into the ferry's path.

Police are investigating the incident.

Three people were taken to hospital following the accident on Saturday afternoon.

The ferry, travelling from Circular Quay to Manly, snapped the yacht's mast and damaged the side of its stern.

Paramedics were called to Rushcutter's Bay to treat the injured, which included a two-year-old child with chest pain.

Three people were transported to St Vincent's Hospital, NSW Ambulance confirmed.

One person was treated for a chest laceration, another with chest pain and a child with a leg laceration.

Passengers on the ferry began calling out as the vessels drew closer.

The ferry crashes into the yacht.

Police say two people who were not wearing life jackets, including the yacht's skipper, fell off board.

Fourteen people were on board the yacht, which is licenced to carry up to 17.

The ferry and yacht masters both returned negative blood alcohol readings.

Police are still attempting to determine how the accident occurred.