The boat carrying 41 Chinese people got into difficulties off Sihanoukville on Thursday, provincial spokesman Kheang Phearom told AFP, and only 18 of those on board had been rescued.
The once-quiet fishing village of Sihanoukville has been transformed by a Chinese investment boom in recent years, with dozens of casinos opening.
But there have been growing reports of Chinese workers being trafficked or smuggled to work in the city illegally.
Kheang Phearom said that police were questioning those they had rescued while the search for the others continued.
"We are searching for the 23 who went missing," he said.
Provincial police chief Chuon Narin told pro-government media outlet Fresh News that a representative of the group told police they left China from a port in Guangdong province by speedboat on Sep 11.
Nearly a week later, they were transferred to a wooden boat with two Cambodian crew members in international waters, the police chief said, and that vessel began to sink after breaking down on Thursday.
He said that a fishing boat picked up the two Cambodians and left, abandoning them and their boat in the sea.
According to Kheang Phearom, the two Cambodians had also been detained for questioning.