An engineer was found near the engine of the vessel, Mwanza regional commissioner John Mongella told reporters on Saturday, after the MV Nyerere sank on Thursday near Ukerewe island on the Tanzanian side of Lake Victoria.
Four navy divers heard sounds that suggested signs of life early on Saturday. They pulled the man out of the overturned ship and he was rushed to hospital.
The man shut himself into the engine room and found an air pocket that managed to keep him alive, the Tanzanian Broadcasting Corporation reported. His condition was not immediately known.
The rescue brought the number of survivors of the disaster to 41.
Bodies continued to float to the surface around the vessel on Saturday. The death toll rose to 209, public radio reported.
While the cause of the accident was not immediately clear, overloading is frequently to blame for such incidents. The vessel's capacity was said to be 100 but state television, citing witnesses, reported more than 200 people were on board the ferry.
Witnesses said the ferry sank when passengers rushed to one side to disembark as it approached the dock. Others blamed the captain saying he had made a brusque manoeuvre.
Transport and Communication Minister Isack Kamwelwe said the government was sending sophisticated equipment to aid the recovery effort.
"This equipment will increase efficiency in the rescue operation and we will continue with the search until we are satisfied that we have rescued everyone," he told the Reuters news agency.
Relatives of the deceased had started to identify the bodies of their loved ones, he added.
Tanzanian President John Magufuli on Friday said the captain of the MV Nyerere had been arrested and he ordered the arrest of all those responsible for the operation of the vessel.
Hopes of finding more survivors were virtually nil and Magufuli said he expected the death toll to rise.
"It is obvious that more bodies are trapped in the capsized vessel," Tanzanian newspaper The Citizen quoted the president as saying.
"Reports I receive show that even the cargo was far more than the 25 tonnes allowed."
In his televised address, Magufuli said he had information the arrested captain was not on board the ship at the time of the capsize, and control of the ferry had been left to someone who was not properly trained.
Four days of national mourning were announced.
Grim search operation
On Friday, onlookers bore witness to a grisly recovery effort as scores of bodies were pulled out of the water of Africa's biggest lake.
Davita Ngenda, a victim's relative, received bad news.
"My son is among the bodies recovered," she told the AFP news agency, weeping. "He had gone with his wife but she has not been found yet."
Sebastian John, a teacher, said such tragedies had become part of life for those living on the lake.
"Since my birth, people have gone to their deaths on this lake, but what are we to do? We did not choose to be born here, we have nowhere to go," he said.
Tanzania's opposition accused the government of negligence.
"We have often raised concerns about the poor condition of this ferry, but the government turned a deaf ear. We have repeatedly denounced this negligence," said John Mnyika, deputy secretary-general of the main opposition party Chadema.
President Magufuli warned against using the disaster for political gains.
"We should let authorities do their job and if you have any evidence, you should wait until the matter is taken to court so that they could help the court to deliver justice," he said.
Capsizes are not uncommon on Lake Victoria and overloading often plays a role in disasters such as these. In 1996, a ferry disaster in the same region killed more than 500 people.
"There's always activity along the shores of Lake Victoria at any time of day or night," Al Jazeera's Malcolm Webb, reporting from the Ugandan side of the lake, said.
"People depend on the lake for their survival; fishermen for fishing, others for water transport and trade. The people on the boat that capsized, many of them were on their way home from a market when the boat tipped over."