The action came after international diplomatic efforts failed to stop the Estelle, which was carrying cement, medical supplies and pro-Palestinian activists, The Jerusalem Post reported.
Navy forces "operated as planned" after passengers on the Estelle "made it clear" they would not change their course and sail to the Israeli port of Ashdod, said an army statement.
The army said no force was used in seizing the ship.
Ron Prosor, Israeli's ambassador to the United Nations, this week wrote to U.N. Secretary-General Ban Ki-moon asking for international intervention to stop the small ship.
He called those aboard the Estelle "weekend revolutionaries" with "radical and extremist agendas."
Activists said the ship was boarded about 30 nautical miles off the Gaza coast, the BBC reported.
The ship, sailing under a Finnish flag, left Naples, Italy, on Oct. 7, carrying about 20 people of eight different nationalities.
Nine Turkish activists were killed in an Israeli navy raid when the Mavi Marmara attempted to break the blockage in 2010.
Notable deaths of 2014 [PHOTOS]