The converted fishing boat, with about 130 people on board, ran into trouble late on Sunday as it headed for an island off Nampula province, officials said.
The latest death toll of 98 was released Monday evening.
Most of those on board were trying to escape the mainland after misinformation about cholera caused a panic, according to Nampula's secretary of state Jaime Neto.
Many children were among the victims, he added.
Authorities said Sunday the boat was believed to have sunk as it was overcrowded and unsuited to carrying passengers.
It was later clarified that the vessel capsized after taking on water.
"Water filled the boat... and the tragedy happened," Menque Amade, a crew member who survived, told national broadcaster TVM.
Silverio Nauaito, the Island of Mozambique administrator, told AFP that at least six bodies were pulled from the waters on Monday.
Rescuers have found 12 survivors and search operations were continuing, the official said.
The southern African country, one of the world's poorest, has recorded almost 15,000 cases of cholera and 32 deaths since October, according to government data.
Nampula is the worst affected region, accounting for a third of all cases.
Locals told AFP that health authorities recently stepped up outreach and prevention efforts.
But the increased medical presence caused a scare among some residents, pushing a number of them to flee, they said.
This video grab obtained by AFPTV from TVM on April 8, 2024 shows the bodies recovered after a boat sank off the north coast of Mozambique killing 96 people, on the Island of Mozambique.
In recent months, the province has also received a large influx of people fleeing a wave of jihadist attacks in its northern neighbor of Cabo Delgado.
Some of those on board were planning to go and stay with family on the island.
"They were running away from the cholera outbreak. They got into the boat, the sea was rough, the boat capsized, and it killed a lot of people," Abdul Chemuna, a relative of three of those who died in the accident, told national television.
'Deeply saddened'
African Union Commission chair Moussa Faki Mahamat sent "deepest condolences" in a message on X, formerly Twitter.
South African President Cyril Ramaphosa said: "As neighbors, we are deeply saddened by this tragedy."
"We wish authorities and citizens well in the recovery effort and the search for missing persons," he said in a statement.
The boat was headed to the Island of Mozambique, a small coral islet that used to serve as the capital of Portuguese East Africa and gave its name to the country.
Television footage showed locals gathered around the red and green wooden boat, which had been pulled onto a beach.
Some looked out at the windy sea. Others stood next to bodies lying on the ground covered by blankets.
A trading-post on the route to India, initially used by Arab merchants, the Island of Mozambique was claimed for Portugal by famed explorer Vasco da Gama.
Hosting a fortified city and linked to the mainland by a bridge built in the 1960s, the island is listed as a World Heritage Site by the UN's culture agency, UNESCO.
Mozambique, which has a long Indian Ocean coastline, was a Portuguese colony until independence in 1975.
Home to more than 30 million people, it is regularly hit by destructive cyclones.
In March, at least one person died as an illegal fishing vessel foundered near a southern beach.
With almost two thirds of the population living in poverty, Mozambique has set high hopes on vast natural gas deposits discovered in Cabo Delgado in 2010.
But an insurgency since 2017 waged by militants linked to the Islamic State group has stalled progress.
More than 5,000 people have been killed and almost a million forced to flee their homes since fighting began.