"I didn't think it was any good. It was full of water," Pacheco told BBC Radio Gloucestershire.
Pacheco said he used an air compressor to dry out the iPhone and was surprised when it turned on once plugged into a charger.
"In the morning when I put it on charge, I just couldn't believe it," he said.
Pacheco posted photos of the phone and its lock screen, an image of a man and a woman, in the Cinderford Noticeboard Facebook group.
The post was shared thousands of times and the man in the photo was eventually identified as Owain Davies of Edinburgh, Scotland.
Davies said he had been canoeing as part of a bachelor party on the River Wye when he fell into the water.
"I was in a two-man canoe and my partner probably shouldn't have stood up, and needless to say we fell in," he said. "The phone was in my back pocket and as soon as it was in the water I realized the phone was gone."
Davies praised Pacheco for going through the effort to return his phone.
"My natural reaction would be to hand it into the nearest pub. It wouldn't be to use my air compressor to dry it out and dismantle it," he said.