At the time of the capsize there were at least 270 people on board, both passengers and crew.
The ferry was privately owned and had departed from the port of Kyrenia at around 12.30pm local time, bound for Tasucu in Turkey's Mersin province.
Authorities said the vessel began taking on water shortly after leaving port, although the reason it overturned remains unclear.
The incident happened approximately four nautical miles from Kyrenia, a popular resort in northern Cyprus that attracts both local residents and visitors.
The ferry, a catamaran known as the FILOJET, was operating on one of the regular routes connecting northern Cyprus with Turkey.
Turkish Cypriot leader Tufan Erhurman said 237 people had been brought to safety, while seven fatalities had been confirmed. Search teams were continuing efforts to locate 23 people who remained unaccounted for.
Footage from the scene showed survivors wearing red life jackets gathered on top of the overturned ferry while rescue crews worked around the vessel.
Turkish coastguard and other vessels, helicopters and rescue equipment were sent to the area as the operation continued.
Officials have warned that reaching anyone who may still be inside the ferry could prove difficult because of the position of the overturned vessel. Additional technology is being used as rescuers attempt to locate those still missing.
The cause of the accident has not yet been established.
A large-scale emergency response has been launched involving authorities in northern Cyprus and Turkey.
The Turkish Cypriot Interior Ministry said the ferry was carrying 259 passengers and eight crew members when it began taking on water.
Four Turkish Cypriot coastguard vessels and a civilian passenger boat were deployed, alongside five Turkish coastguard vessels and two helicopters.
Turkish Cypriot Prime Minister Unal Ustel said all relevant emergency services had been mobilised, with the search for survivors remaining the authorities' primary concern.
The disaster comes after severe storms affected Cyprus the previous day. One person died in the south-east of the island after a sailboat was thrown onto rocks in rough conditions.
Officials have acknowledged the recent weather but said conditions at the time of the ferry's departure had been considered suitable for travel.
The search and rescue operation remains ongoing as authorities work to establish exactly what caused the ferry to overturn and account for everyone who was on board.
