The MV Barima was travelling from the capital Georgetown to the northwest village of Port Kaituma when it capsized.
The government's National Communications Network said 69 people had been rescued, while another 83 remain missing.
The vessel overturned late on Saturday. Authorities had suggested an inaccurate passenger manifest and suspected drug use by the crew may have contributed to the disaster.
By Monday afternoon, the vessel had been found on the seabed in search operations carried out by private company VEHSI in collaboration with Exxon Mobil and local fishermen, Guyana's Minister of Public Utilities and Aviation, Deodat Indar, said on social media.
Search teams, assisted by private energy sector vessels and divers, had expanded their search area to 1040 sq km.
Prime Minister Mark Phillips has launched an investigation into potential institutional failures, promising that anyone found guilty of negligence or misconduct will face legal action.
Phillips told reporters that officials believe there were many more passengers than those documented aboard the decades-old ferry.
Passengers have complained for years that ticket clerks unofficially sell seats to friends and associates for cash without adding their names to the manifest, a practice that has persisted for decades at state-run ferry terminals.
Phillips also said the rescued captain and at least one other crew member tested positive for marijuana and remain in police custody as part of the criminal investigation.
with AP
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