It happened just around 12:30 p.m. Sunday at the Green Turtle Bay area near the fuel pumps.
Our own Evan Gorman was on another boat in the marina and was the first to call 911.
Fish and Wildlife officials say a man an wife were on their 32 foot boat and had just refueled when the explosion happened.
They say the couple was able to make it off of the boat, and were taken to a Paducah hospital with non-life threatening injuries.
Witnesses say the boat came up out of the water, flipped, and went back in. They say once it took on water, it caught fire and sank.
Officials say a nearby pontoon boat was also damaged, and some of the people on it had minor injuries that were treated on scene.
"We had just kind of gotten up for the day, sitting around talking to each other, relaxing and just all of a sudden you heard this loud explosion unlike anything I've ever heard," said Evan. "We just watched a fire works show last night, a really nice show at a different marina, but what we heard this morning doesn't even compare at all to what we heard."
Officials say a similar explosion happened Wednesday on Kentucky Lake. They say they usually have about one a year in that area.
Officials remind boaters to make sure they turn on their blowers for the correct amount of time after refueling.
In this case, they say they aren't sure if they were not left on long enough or if they malfunctioned.
Officials tell us they are surprised there were not more serious injuries.