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A police spokeswoman said they were called to Taieri Mouth, about 1.10pm, after a small boat with an outboard motor flipped while attempting to cross the bar.
Police on Saturday night said one child had died in Dunedin Hospital and another child remained in the Intensive Care Unit in a stable condition.
Three other people, including two adults and a child have now been released from hospital care.
Police will continue to make enquiries on behalf of the Coroner and are focused on supporting the family of the people involved in this tragic incident.
A St John spokeswoman said two patients with critical injuries were flown to Dunedin Hospital by helicopter.
One person with serious injuries was also flown to hospital, while another two people with moderate injuries were transported by ambulance, she said.
The group were brought back to shore by local surfers and jet skiers, police said.
"First aid was initially provided by two surfers who are also medical doctors."
A Fire and Emergency New Zealand spokesman said they sent a crew from the Brighton Volunteer Fire Station to assist.
Police confirmed the boat has been recovered and Maritime NZ have also started an investigation.
A rāhui has been put in place by local iwi in the area of Taieri Mouth until 9am tomorrow.