Thick, black smoke billowed from the boat fire in the water off Stepping Stone Marina just before 4:30 p.m.
"They got as far as the end of my mooring area, my channel, and the boat exploded," said Peter Zorskas, a launch operator for the Stepping Stone Marina.
Zorskas told CBS2's Thalia Perez he jumped into action to help rescue the passengers after he heard the explosion and saw the 22-foot boat go up in flames.
"Three of the occupants were thrown off, overboard, and the two jumped overboard," Great Neck Alert Fire Company Chief John Purcell said. "We got all five of the people out within two minutes of the explosion."
Two adults and two teenagers suffered scrapes and burns. Officials say a 5-year-old boy suffered broken bones.
John Yuska, an employee of Great Neck Park, says he stayed with the child until an ambulance arrived.
"He was crying, but he was, you know, OK. He had an issue with his arm, but his leg, compound fracture," he said.
Officials say the fire was under control within 30 minutes thanks to a multiagency response from the FDNY, the NYPD and the Coast Guard.
The cause of the explosion and fire is under investigation.
"At this time, from what the Coast Guard and the Arson Squad are saying, it was just a malfunction of the boat, whether it was the gas, whether it was the motor or the gas, but it came from the rear," Purcell said.
The victims were all taken to local hospitals.
Officials want to remind those going out on the water that lifejackets save lives. Everyone in this incident was wearing one, and without them, the outcome could have been much worse.