Penn had planned to rescue children waylaid by Katrina's flood waters, but apparently forgot to plug a hole in the bottom of the vessel, which began taking water within seconds of its launch.
The actor, known for his political activism, was seen wearing what appeared to be a white flak jacket and frantically bailing water out of the sinking vessel with a red plastic cup.
When the boat's motor failed to start, those aboard were forced to use paddles to propel themselves down the flooded New Orleans street.
Nobody was rescued since his entourage filled the boat.