Vestas 11th Hour Racing struck a fishing boat about 40km from the finish line of Leg 4, Melbourne to Hong Kong.
Crew of the American-flagged Vestas 11th Hour Racing includes Kiwi yachtie Tony Mutter.
His wife, Jo, told the Herald family of crew members had been asked not to comment on the incident.
South China Morning Post reports that the fishing boat, from Mainland China, had sunk and ten crew members had fallen into the sea.
"One [fishing boat] crew member was seriously injured and taken to hospital by helicopter. He was confirmed dead at 6.30am," the paper reports.
Race officials say that Vestas 11th Hour Racing had retired from the leg and was proceeding under its own power to Hong Kong.
A statement on the Volvo Ocean Race's official website said all of the crew on Vestas 11th Hour Racing are safe.
"Their boat suffered damage and the team has officially retired from the leg, but the team is able to motor to shore."
Vestas also released a statement to confirm that all of the crew are safe.
"Their boat suffered damage and the team has officially retired from the leg, but the team is able to motor to shore," it said.
Photos show a gouge to the side of the yacht's hull.
"Our first thought is that this is terrible news," AP reported Dongfeng skipper Charles Caudrelier saying.
"We are of course very sad to hear it and very concerned about the fishing boat. It is always very dangerous when sailing in these fishing areas when there are so many boats and some have no lights. Obviously this is very bad news for these fishermen, the Volvo Ocean Race and for Vestas."
Race Control at Volvo Ocean Race headquarters was informed of the collision by the team moments after it happened at approximately 17:23 UTC.
The Vestas 11th Hour Racing team issued a Mayday distress call on behalf of the other vessel, alerting the Hong Kong Marine Rescue Coordination Centre (HKMRCC) and undertook a search and rescue mission.
HKMRCC told Race Control that a commercial vessel in the area was able to rescue nine of the crew and that a tenth crew member was taken by helicopter to hospital.
Race officials say more information will be released as it becomes available.
Kiwi yachtsman Peter Burling had a lucky escape in the race just before Christmas when his Dutch entry Team Brunel yacht was struck by a rogue wave near the Antarctic Ice Exclusion Zone.
The force of the wave sent Burling and teammate Annie Lush into the guard rail at the back of the boat.
Burling was unhurt and "doing well" but Britain's Lush was left with pain down her right side as she struggled to move her right leg.
