The 2.15 sailing from Picton temporarily lost propulsion power near the end of its journey and dropped anchor off Wellington's south coast.
Approximately 800 passengers and 80 crew are safe but were issued life jackets.
KiwiRail Chief Executive Peter Reidy says the vessel has been sailing under its own power but accompanied by tug boats as a precaution.
It's been travelling slowly and is expected to arrive shortly.
KiwiRail will investigate the cause of the temporary loss of power.
