State-run television says Turkish commandos stormed the hijacked ferry and shot dead the lone hijacker.
TRT television said some people jumped into the sea during the raid, but it wasn't immediately clear if any of the 18 passengers aboard were harmed.
The ferry was anchored just off the coast of the town of Silivri, on Istanbul's outskirts.
Coast guard boats and a helicopter were chasing the ferry since it was hijacked on Friday evening after it set sail from the northwestern port of Izmit.
Authorities said a suspected Kurdish rebel hijacker, claiming to possess a bomb, had commandeered the ship.
Earlier, Transport Minister Binali Yildirim said "four or five" hijackers claiming to act on behalf of rebel Kurdistan Workers' Party, known by its Kurdish acronym PKK, seized the ship after it set sail from Izmit.
But Ercan Topaca, governor for Izmit province, later said the number of hijackers was not known and that a hijacker, claiming to possess a bomb, might be acting alone.
The Kurdish rebels are fighting for autonomy in Turkey's mainly Kurdish southeast and have stepped up attacks on Turkish forces in that region in recent months, killing dozens of Turkish soldiers and civilians. The Turkish military responded by staging an air and ground offensive against rebel hideouts in neighboring Iraq. Turkish police have also detained hundreds of Kurdish activists on suspicion of ties to the rebels.
Gunboats patrolling area
The pro-Kurdish Firat news agency, without citing sources, said the ferry was allegedly heading toward the heavily guarded prison island of Imrali, where the Kurdish rebel chief Abdullah Ocalan is serving a life sentence in prison.
The Hurriyet newspaper's online edition said security at Imrali was increased. Gunboats were patrolling a five-mile no-go area around the island which is sealed with an electrical fence, it said.
Yildirim told the Anatolia news agency that the intentions of those involved are not known.
He said late Friday that the boat was anchored off Istanbul.
"The ship's fuel is about to run out. There was a request for fuel and food. They also asked for equipment to fix a problem in the engine room," Yildirim said. "We are assessing the request. What is important for us is the safety of the passengers."
Yildirim said there are 18 passengers on board, including five women, as well as four crew and two trainees.
Topaca said none of the passengers had been harmed.
Other ferries suspended
Authorities suspended other ferry services in the Sea of Marmara as a precaution, TRT television reported.
The rebels and Kurdish politicians have been calling for Ocalan's release as a condition for peace.
NTV television said the hijackers had collected all the passengers' mobile phones.
Tens of thousands of people have died since Kurdish rebels took up arms in 1984.
In 1998, security forces stormed a plane on the tarmac of Ankara airport, and shot and killed a Kurdish rebel hijacker armed with a hand grenade who held 38 people hostage aboard a Turkish Airlines plane. The man was protesting Turkey's fight against the rebels. No passenger was injured.
In 1996, Chechen militants hijacked a Turkish ferry for four days in the Black Sea to attract world attention to Russia's military drive in Chechnya. The incident ended without any violence.
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