Eyewitness Lisa Capes told Australian broadcaster ABC that she saw people running away from the ride crying.
“I was speaking to one of the guys and he said it was the raft or the boat thing in front of him, the whole thing flipped and everyone was screaming,” she said.
Queensland police spokesman Todd Reid said investigators were reviewing CCTV footage of the incident while crews worked to remove the bodies from the scene.
“It is a complex retrieval involving heavy equipment and that will take several hours,” he said.
He added he was not aware of any earlier problems with the ride, although that would form part of the investigation.
The theme park, 48km (30 miles) south of Brisbane, said it was “working as quickly as possible to establish the facts around the incident and is working closely with emergency authorities and police to do this.”
Craig Davidson, head of Ardent Theme Parks, said they were “deeply shocked and saddened” by the incident.
Australian Prime Minister Malcolm Turnbull said he was “very saddened to learn of the tragic accident”.
“Theme parks are a place for family fun and happiness, not tragedy,” he said.