A passenger on the Bluebridge Straitsman ferry heading from Picton to Wellington said the trailer went over the side of the ship about 10.30am.
Mariia Hakala said the sea was rough when the trailer went overboard.
"There were a lot of waves. There was a side wave and it made the boat go sideways.
"The next thing I know, people were saying a trailer had fallen into the water."
Strait Shipping general manager commercial Ed Menzies said they were not sure how the trailer came off.
"The unit was storm lashed and it is unclear as to why it moved and broke the ship's railing, and the company has launched an immediate investigation into what happened.
"Strait Shipping has not had an incident of this nature before."
Following the incident the ship continued on to Wellington.
Ms Hakala was sitting near the kitchen when the incident occurred.
"I could hear a lot of stuff falling down in the kitchen."
She said many passengers were vomiting.
"It was really hard to walk inside because the waves were really high. People were throwing up."
She said crew gave the passengers paper bags and ice cubes.
MetService meteorologist Peter Little said gale-force winds had ripped through Cook Strait this morning, causing choppy seas.
"We've had a gale there, and there's been waves of four-and-a-half metres, and up to about seven metres occasionally."
Mr Little said the extreme conditions weren't unusual for the strait.
"It does happen from time to time, the large waves are more unusual than the gale but we do get them a few times a year in the Cook Strait."
Lorena Ojeda and her daughter Ada were booked in to take a ferry to Picton, but it was now delayed.
"Our ferry was meant to leave at 1.30pm but it's not leaving at 3.30pm.
"They said it was because of mechanical issues."
A spokesman said Maritime New Zealand officers are at the ship and assessing what has happened, but they had no further details.
This afternoon's sailings of the Straitsman have been cancelled.
