The vessel had left the port of Kyrenia, also known as Girne, and was traveling to the Turkish port of Tasucu in Mersin province when it began taking in water about 7.5 kilometers off the coast.
The Turkish ambassador to Nicosia, Ali Murat Basceri, said there were some casualties but did not specify how many.
Many of the passengers and crew members were rescued, Basceri said, adding that some were taken to hospital.
Meanwhile, Kyrenia Mayor Murat Senkul said the ship belonged to the Filo Denizcilik ferry company and sank off the coast of Diana beach on Cyprus’ northern coast.
Video footage from the scene showed people wearing life vests awaiting rescue on top of the capsized vessel.