Police say the incident took place around 7:15 Monday evening in Bald Indian Bay.
Four people from Winnipeg were transporting gas cans from the Bare Point Marina, when the explosion took place.
The 5.6 meter fiberglas boat was destroyed in the blast, and all four occupants ended up in the water.
They were rescued by people who were at the marina at the time.
The four ranged in age from 22 to 59 and are recovering in hospital in Winnipeg.
The Ontario Fire Marshall's office has been contacted and the investigation is continuing.