A yacht inaptly named 'Fearless' has lost both its sails and its motor while sailing of Smokey Cape, about 40nm north of Port Macquarie.
Two crew and a ten-year-old child were rescued after signalling their distress.
Authorities earlier were forced to abandon a rescue attempt because of rough seas.
But a Coffs Harbour water police vessel – off Smoky Cape, about 80km north of Port Macquarie - reached the stricken vessel at 2pm.
Australian Maritime Safety Authority spokesman Mal Larsen the rescue, by crew aboard an 18m Coffs Harbour police, was hindered by 5m seas and strong southerly winds.
Mr Larsen confirmed the three people on board were safe, and Fearless was towed into Coffs Harbour.
'The police boat went out then had to come back because of heavy winds but they got back to them,' Mr Larsen told Port Macquarie News.
The yacht was headed north on Wednesday at 11pm when its sails were shredded by the winds at Smoky Cape, near South West Rocks.
A seized motor worsened the situation. Port Macquarie Marine Rescue spokesman Geoff Shelton said the yacht drifted 17nm from its original position before rescuers reached it.
'It blew out its sails at about 11pm. Then at 2am it lost its motor,' Mr Shelton said.