Bryon Marshall, 31, was described as a hero after rescuing the passenger from the 10-metre boat, which claimed the life of the other trapped man when it capsized in Victoria's Port Phillip Bay just before 4pm (AEDT) on Sunday.
The boat, carrying 12 people, was hit by a freak wave off Point Nepean, throwing 10 into the water.
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Two remained trapped in the hull while the other 10 took refuge on a life raft, just inside The Heads, and were rescued by a nearby dive boat.
Dive Victoria operator Jason Salter and Mr Marshall set out from Queenscliff after being alerted to the emergency and arrived on the scene within 20 minutes.
With no emergency services on the water, Mr Marshall, a former surf life-saver, swam out to the boat to search for the two missing men.
Discovering one submerged and tangled in fishing line, he tried unsuccessfully to free him before finding another man, who was disoriented and trapped inside the hull of the capsized boat.
"We waited for a lull in the waves and I motioned for him to come out and I gripped him by the arm and pulled him out," Mr Marshall told AAP.
"With the waves and everything crashing on him he didn't have much hope really of being able to see where he was."
Mr Marshall towed the man, aged in his late 50s, into the shallows, where he was winched to safety by a rescue helicopter and taken to Frankston Hospital.
His condition was later described as stable.
Two other survivors were taken to Geelong Hospital suffering minor cuts, bruises and hypothermia.
Police have yet to formally identify the dead man.
Employees praised
Mr Salter said the rescued man was lucky to be alive and praised the actions of his employee.
"The rescue chopper wasn't prepared to put anyone in the water to go in and have a look inside the boat so my guy went in and if it weren't for him going in I don't think that guy would have survived," he told AAP.
"(He's) absolutely heroic, he's a strong guy in the water but still, to put your life at risk to help another - he did that without question and this person is alive now because of his effort."
Mr Marshall said he "just did what I was trained to do" and was coy about being labelled a hero.
"It's still sinking in a little but I think all in all everyone did a really good job and I think there's a man alive today because of a few people's actions."
A spokesman for the boat's operator, Gamerec Charters, declined to comment.
