Only three people had been rescued, according to the Sudanese Media Centre, a state-linked news agency.
A fire broke out on board the boat, which was trying to smuggle people to Saudi Arabia, the agency reported.
The boat had launched from Sudan's Red Sea State, carrying migrants from neighbouring countries, it said.
Most of those on board were from Chad, Nigeria, Somalia, and Eritrea, SMC reported, adding that efforts were continuing to find survivors.
Four Yemenis who allegedly owned the boat had been arrested in Port Sudan state, the report added.
Local authorities had foiled an attempt to smuggle 247 other people across the sea, it said.
The Red Sea is a well-known trafficking route to Saudi Arabia and Yemen, says the BBC's James Copnall in Khartoum.
Thousands of migrants cross the Red Sea every year, but the journey is a dangerous one, adds our correspondent.
Last month, 150 people drowned when a ship carrying some 850 migrants fleeing the conflict in Libya capsized off Tunisia.
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