The 16-year-old boy and a man in his 60s lost their lives after they were rescued from the sea off Malin Head.
Holidaymakers raised the alarm after they heard shouts and saw three people in the water after their fishing boat capsized on Tuesday.
The teenage male was airlifted to Altnagelvin Hospital where he tragically died on Tuesday night despite the valiant efforts of doctors and nurses.
A man in his 60s, believed to be from Donegal, was pronounced dead at the scene, Gardaí said.
Another man, also from Derry, who is believed to be in his 50s, remains in Altnagelvin Hospital.
His condition is described as stable.
It is understood the small boat left the coast at about midday on Tuesday.
Joe Joyce from Lough Swilly RNLI lifeboat, was one of the crew members involved in the rescue operation.
He said they got a call at 15:30 local time that a boat had capsized at Malin Head.
“There were some holiday homes above the pier and holidaymakers heard shouts from the water. They looked out and saw people in the water and they contacted Malin Head marine rescue centre.”
Mr Joyce said two lifeboats were launched from Buncrana, a coastguard vessel from Greencastle was called and the coastguard rescue helicopter also flew to the scene.
“They airlifted a person to Altnagelvin and a local fishing vessel recovered another person who was clinging to a buoy in the water,” Mr Joyce said.
“The search for the third person went on for an hour. Then people walking on the shoreline discovered the fisherman washed up on the shore.”
It is believed the three people were in the water around about half a mile from land.
“This is a difficult time for everybody and our thoughts are very much with the family of the deceased people,” Mr Joyce said.
A Garda spokesman said: “Gardaí in Co Donegal were notified of an incident in the water off Malin Head at approximately 4.15pm on Tuesday, July 17.
“Three people on a boat had got into difficulties and the Coast Guard had mounted a rescue operation.
“A man in his 60s was taken from the water and pronounced dead at the scene.
“His body has been taken to Letterkenny University Hospital where a post mortem will take place.
“A teenage boy and a man believed to be in his 50s were taken to Altnagalvin Hospital in Derry.
“Gardaí have been notified by The PSNI that the teenage boy has also died.
“The man in his 50s remains in hospital.
“The man in his 60s is believed to be from Co Donegal and the other two occupants of the boat from Derry.”
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