Fishermen said they recovered the 25 bodies after the boat they were traveling on capsized and up to 200 people overturned, a provincial AFP official said.
"The boat overturned two days ago and carried between 160 and 200 people," said Jalil Ahmed Ali of the Lahij Provincial Authority, citing information from Yemeni smugglers.
The fate of the other people on board was unclear.
Fishermen in South Yemen told AFP that they had recovered the 25 bodies of victims who appeared to be of African descent – some of the many trying to reach Yemen before crossing to the Gulf States.
The fishermen said the bodies were floating in the waters of the Ras al-Ara area in southern Lahij Province, overlooking the Bab-el-Mandeb Strait off the coast of Djibouti.
"We saw the bodies floating in the water 16 km from the coast of Ras al-Ara," said one of the fishermen.
The United Nations International Organization for Migration confirmed to AFP that a boat sank in the area, but said it is still trying to find out the details of the incident.
Despite the conflict in Yemen, migrants continue to travel there in the hope of finding work in neighboring Saudi Arabia and other oil-rich countries whose economies depend on millions of foreign workers.
Migrants are often stranded in Yemen, which after six years of conflict is in the worst humanitarian crisis in the world.
In recent months, dozens of migrants have died in Bab-el-Mandeb Street, which separates Djibouti from Yemen, an important route for international trade, but also for human trafficking.