Emergency services are searching Lake Illawarra waters off Tallawarra power station after an unmanned boat was found overturned about 3pm on Wednesday afternoon.
Police believe to likely the small boat simply broke away from its moorings in strong winds.
A cyclist noticed it pushed up against the breakwall and raised the alarm.
Lake Illawarra duty officer Inspector Brian Pederson said there were no cars in the car park nearby that would have been likely to carry that kind of boat.
No one had been reported missing, he said.
An ambulance rescue helicopter is searching the lake around Yallah Bay from overhead.
Police Rescue have retrieved the boat and NSW Ambulance paramedics are also on site.