Fethard RNLI and Waterford's Irish Coast Guard helicopter Rescue 117 were also called out to the scene, where the Dunmore East lifeboat crew saw that the vessel was sitting deep in the water and was perilously close to the rocks.
There was nobody on board the yacht, which may have drifted after coming free of its moorings.
First on scene was the Fethard RNLI inshore lifeboat, whose crew established a tow with the yacht. However this proved unsuccessful.
Shortly after, Dunmore East arrived and put two crew on board the casualty vessel with a pump to try and drain the water from the yacht and establish another tow to recover it to a nearby harbour.
But once on board, the lifeboat crew discovered that the yacht had taken on a large amount of water and that it was in danger of sinking. When they attempted to establish a tow the vessel dangerously dipped low into the water and the attempt was abandoned.
The decision was then made to leave the vessel as it was determined that the crew were in danger if they stayed on the yacht.
Commenting on the callout, Dunmore East RNLI lifeboat press officer and crew member Neville Murphy said: "The yacht had taken on a huge amount of water and as such it proved too difficult to safely recover her.
"Once it was established that there was no threat to life and it was clear it was too dangerous to safely recover the vessel we made the right decision to step away.’
Las of late in Tuesday the vessel was still aground, but an attempt may be made to recover her at low water.