The helicopter had picked up an injured crab fisherman before it crashed late Thursday near the South Korea-controlled islets of Dokdo between the Korean Peninsula and Japan.
Dozens of aircraft and vessels and more than 30 divers have searched the area since around midnight.
Divers found the wrecked helicopter about 70 meters (230 feet) below the surface on Friday afternoon, Hwang Sang-hoon, a Korea Coast Guard official, said in a televised briefing.
Rescuers are now focusing their search on nearby waters and South Korea's navy plans to deploy remotely controlled underwater vehicles to search the wreckage, he said.
Hwang acknowledged the chance of finding survivors was low, considering the time of the crash and cold water.
"We will closely examine the helicopter's body and search for any (crewmembers and passengers) inside before deciding whether to raise the copter," Hwang said.
Seong Ho-seon, another rescue official, said the helicopter was taking the injured fisherman to a hospital in the mainland city of Daegu, but likely crashed into the sea in strong winds within two minutes after liftoff from Dokdo.
The Dokdo islets, called Takeshima in Japanese, are a subject of a territorial dispute between the countries.