The three-masted Le Marseillois, where celebrities such as Tom Cruise and George Clooney ate, sank about 30 minutes after an employee first sounded the alarm early in the morning.
"The pump in the hold which works around-the-clock to empty water had broken down," a fire department spokesman said.
Around 25 firefighters and divers were deployed to try and save the boat -- a star attraction in the southern city's old port.
It was then bought with funds raised by Marseille residents keen to preserve old vessels, and anchored off the port in 1977. The boat was turned into a restaurant at the start of the 1990s.
