Mr Blaine was trying to free himself from chains and handcuffs while trying to break the record of 8 minutes, 58 seconds for holding one's breath underwater.
The stunt, following a week-long endurance challenge underwater, was televised live from New York.
With Mr Blaine's face contorted in pain and bubbles rising to the surface, divers went in to release him from the chains and pull him out.
Mr Blaine held his breath for seven minutes and eight seconds.
After being given oxygen, he addressed the crowd that had gathered around the globe-like tank on the plaza of Lincoln Centre for the Performing Arts in Manhattan.
"I am humbled so much by the support of everyone from New York City and from all over the world," Mr Blaine said.
"This was a very difficult week. But you all made it fly by with your strong support and your energy."
After a 100-minute television preamble that showed his training techniques - including holding his breath in a tank of sharks – Mr Blaine had sucked in his last breath before going under.
Kirk Krack, his trainer and a diving expert, offered encouragement as Mr Blaine remained nearly still for the first five minutes of his dive.
Then, methodically, he removed two of his handcuffs and was trying to remove chains that held him before the divers came in to save him.
Dr Murat Gunel, who heads Mr Blaine's medical team and is an associate professor of neurosurgery at Yale University School of
Medicine, said before the attempt: "He is pushing his body insanely to the limits."
Dr Gunel and other medical experts had been monitoring Mr Blaine's condition 24 hours a day from an adjacent tent filled with medical equipment and machines.
The professor said the challenge had taken a toll on the magician's body, including liver damage, the sensation of pins and needles in his feet and hands, some loss of sensation elsewhere, and rashes all over his body, which glistened pale white in the tank.
On Sunday, Mr Blaine, 33, wearing a diver's helmet with a two-way communication system, said he would "give it my best shot" to complete the feat despite peeling skin, sharp pains in his joints and a severe earache.
Mr Blaine started training in December, with some help from the US Navy.
He lost 22kg so his body would require less oxygen.
As early as the second day of his challenge, Dr Gunel said, there was evidence that Blaine was suffering liver failure; the medical team consulted with medical experts at NASA before stabilising his condition.
Mr Blaine's underwater environment was similar to the weightlessness experienced by astronauts in outer space, he said.
"I told him he needed to get out of the water, and he refused me," Dr Gunel said. "He said he did not want to let the people down."
The doctor said Mr Blaine had agreed to allow researchers at Yale to examine him after the stunt to see what they can learn about how the body responds to an underwater environment.
Mr Blaine's previous feats include balancing on a 56cm circular platform atop a 30-metre pole for 35 hours; being buried alive in a see-through coffin for a week; and surviving inside a massive block of ice for 61 hours, all of which were performed in New York.
In 2003, he fasted for 44 days in a suspended acrylic box over the Thames River in London.