James Reid, 75, and his grandson David Irvine, 35, were spotted by a passing fishing vessel at around 8am today.
A massive air and sea search was launched at around noon on Tuesday after their 16ft fishing boat was reported two hours overdue.
Rescuers continued to search yesterday, focusing on an area between Gourdon in Aberdeenshire, from where it is understood the boat set off, to Todhead Point and out into the North Sea.
Yesterday the search involved the rescue helicopter from RAF Lossiemouth, lifeboats from Montrose, Aberdeen and Stonehaven, coastguard teams from Montrose and Stonehaven and local vessels in the area.
It was called off at around 8pm last night after no traces of the missing boat were found.
Police said: "Police Scotland can confirm that the two fisherman, David Irvine and James Reid, missing from the Gourdon area have been found safe and well today, approximately 46 miles off the coast of Montrose after being spotted by a passing fishing vessel.
"The vessel, the Water Rail, was reported overdue on Tuesday 20 May and searches have been made by the coastguard, Royal Air Force, lifeboats, fishing boats and the Police Scotland helicopter.
"Arrangements are currently being made to repatriate the men with their families."
A Maritime and Coastguard Agency spokesman said: "We are delighted that the missing fishermen have been found and that they will be reunited with their families shortly.
"They were discovered about 46 miles south east of Gourdon.
"The pair are currently on board the fishing boat which found them and are heading towards land and will be transferred to an all-weather lifeboat or search and rescue helicopter shortly to bring them ashore.
"Aberdeen Coastguard has been co-ordinating an extensive air and sea search for the two missing fishermen. This has included using two search and rescue helicopters, a surveillance aircraft, police helicopter, lifeboats, coastguard rescue teams, and using vessels in the area to assist."
In a post on Facebook Mark Spence, who is believed to be on the boat that found the missing men, wrote: "Ma night was affa boring untill we came across the two lads thats been lost at sea for 3 days now , got the lads on board safe and sound , now towing their boat to montrose to get them ashore , both men safe and sound."
The post in Fishing News on Facebook has so far garnered more than 2,000 "likes".
Mr Spence wrote that it was: "Magic to find them."