The dead included at least five children, China's official Xinhua news agency reported.
Hong Kong authorities said six crew members from both vessels had been detained following the disaster Monday night off Lamma Island.
One of the vessels, the Sea Smooth, was a regular passenger ferry operated by the Hong Kong and Kowloon Ferry Co. with an undetermined number of commuters aboard at the time of the incident. The other was the Lamma IV, carrying 124 people including staff and families of Hong Kong Electric Co. for an outing to see the fireworks display in Victoria Harbor in observance of a national holiday, Xinhua said.
The report quoted Hong Kong Electric as saying the Lamma IV was damaged but did not sink.
All those reported dead so far were aboard the Lamma IV, The New York Times said. The report said the boat was built to carry 200 passengers.
Hong Kong Chief Executive C.Y. Leung said his government would set up a commission to investigate the cause of the disaster.
Hong Kong Police Commissioner Andy Tsang announced the arrest of the six operators of the two vessels and did not rule out more such arrests, the report said.
"This is definitely an isolated accident. The marine territory of Hong Kong is safe," Leung was quoted as saying.
The top leaders of China including President Hu Jintao expressed condolence over the incident.
It was the worst sea disaster in Hong Kong in more than 40 years. In 1971, a ferry sank off Lantau during Typhoon Rose, killing 88 people.