The Israeli military says its troops have boarded the Rachel Corrie, the Irish-chartered aid ship bound for Gaza.
A spokeswoman said they did so with the full compliance of the crew.
Israeli navy vessels had been shadowing the aid ship.
Earlier the military said those on board the vessel had ignored several messages telling them to go to the Israeli port of Ashdod.
The ship has fifteen passengers, including the Nobel peace laueate Mairead Maguire. During the morning it was believed to be in international waters, about 50 kilometres off the Israeli coast.
Israel had always said it would not allow the ship to go to Gaza, but said offered to offload the cargo at Ashdod and transfer the aid to the Palestinian territory.
Although the activists seemed determined to break the blockade, they also said they would not resist Israeli attempts to stop the ship.
It would seem that the latest operation has been carried out in marked contrast to the night-time raid earlier in the week. Nine Turkish activists were killed when Israeli commandos stormed another aid ship, triggering an international outcry.