A transport agency spokesman said 18 people have been rescued alive, but fears are rising that scores of others will be found dead. [break]
Rescue efforts were hampered by high waves and nightfall.
Recent years have seen several ferry accidents in Indonesia. More than 400 people died when a ferry sank in 2006.
The captain of the Teratai Prima, who was among those pulled alive from the sea, said that about 150 people managed to jump off before the vessel went down, AP reported.
A few survivors are said to have been spotted by fishermen as they drifted on lifeboats, but it is not yet known how many are still missing.
The ferry was making an overnight journey from Pare Pare in South Sulawesi to Samarinda in East Kalimantan.
Indonesia´s state-run Antara news agency said the vessel went down at 0400 local time (0245 NST Sunday, 2100 GMT Saturday) in stormy seas.
The area has been buffeted by storms, heavy rains and high winds for several days, causing flash flooding in some areas.
Indonesia relies heavily on ferry services to connect the main islands in the archipelago, but accidents are common.
In December 2006, a ferry carrying more than 600 people sank while on a journey from Borneo to Java. The majority of its passengers were never found.
Months later, at least 42 people were killed when a fire broke out aboard a ferry from Jakarta to Bangka island off Sumatra.
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