Marine police were called to Chalong Pier at 2am to help put out the blaze on the boat, the Choksomboon 15, belonging to Andaman Ocean Safari.
Lt Col Chatchai Sakdee said the boat, moored about 150 metres from shore, was constructed of wood and contained a lot of combustible items.
After two hours of fighting the flames, the Marine Police were getting nowhere, so they decided to tow the burning boat another 200 metres away from shore, where it sank.
The only person on board when the fire broke out was a Burmese crewman, who leapt overboard and was picked up uninjured.
Marine police believe a short-circuit in the engine room cause the fire.
The dive boat, estimated value B10 million, was a total loss.
This is the second boat fire in three days. On Tuesday a tuna boat caught fire at the fishing port in Koh Sirey. Firemen, unable to get to the fire in the engine room, had no choise but to sink it.