Three men are stranded on a luxury yacht that struck rocks and is taking on water south of Melbourne.

The 21-metre yacht hit rocks about 3pm on Saturday in waters off Point Nepean on the Mornington Peninsula, at the mouth of Port Phillip Bay.

A Victoria Police spokeswoman said emergency crews were notified about 3.30pm and Water Police boats were heading to the scene to rescue the men.

The boat would be salvaged at a later date, the spokeswoman said.

Eileen Murray, president of the Southern Peninsula Rescue Squad, said the squad was notified of the incident about 3pm and was assisting police with the rescue.

The stranded yacht was in waters close to the notorious Corsair Rock, near Fort Nepean, Mrs Murray said.