One fisherman remains missing, while another was airlifted to hospital.
The coastguard received a distress alert just before 3.45am on Saturday, and the vessel’s emergency positioning beacon was activated near Mingulay.
An air and sea search for the remaining missing man has now been scaled back.
Mark Rodaway, UK Coastguard national maritime operations commander said: “Despite an intensive search including the helicopters, lifeboat and other fishing vessels in the area, we have been unable to locate the missing fisherman. Our thoughts are with all those involved”
Chief Inspector Alastair Garrow said: “At this time we can confirm that the bodies of two men have been recovered. A third man was rescued and was taken to hospital at Stornoway. He is not seriously injured.
“A fourth man was on the boat and is still missing. The next of kin of all the men have been informed.
“This has been a tragic incident which will impact on the local community. Our thoughts are with the families affected.”
Police Scotland and the Marine Accident and Investigation Branch will carry out a joint investigation into the incident and report will be submitted to the procurator fiscal.
A Maritime & Coastguard Agency spokeswoman said the vessel went down with the four crew on board in relatively calm weather conditions.
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