The passengers aboard the motorised canoe, who may have numbered 200 even though such vessels are built for a maximum of 100 people, were returning to the fishing town of Tombo with fuel and provisions on Monday. They had fled fighting in the port last week.
The sinking is the third in a month, the Sierra Leone Boatmen's Union said. "The boat sank because it was overloaded with more than 200 people and was carrying 300 bags of sugar," a union official said.
Fighting in the small, diamond-rich country has increased since January as rebels challenging the elected president, Ahmad Tejan Kabbah, have stepped up their offensive against Ecomog - Nigerian-led peace enforcers sent to support the country's democratic but militarily weak government.
Ecomog and the Sierra Leonean government have banned most shipping along the country's coast, for fear that Liberian-backed rebels will smuggle arms into the coastal capital, Freetown, aboard fishing canoes. Apart from a brief spell in December and January, the rebels have not succeeded in entering Freetown.
The only shipping allowed is by fishermen aboard small canoes, under armed guard from Ecomog. All other boats know they are in danger of being sunk by the peace enforcers.