Birrell Stewart, 30, was recovered from the water about a mile off the coast of East Wemyss, after the 10ft fishing boat capsized in the Forth shortly before 5pm on Monday.
He was airlifted to hospital where he died a short time later.
Efforts to find his two missing companions have been continuing and will carry on over the forthcoming days, police said. The missing pair have been named as Jason Buchan, 35, and 47-year-old David Stead, both from East Wemyss.
Chief Inspector Adrian Annandale, area commander for Levenmouth, said: “This is a tragic incident and our thoughts are with Birrell’s friends and family at this time.
“We are continuing to search the coast for both Jason Buchan and David Stead and our co-ordinated search activity will continue in the forthcoming days.
“Sadly, given the time that has passed since the incident was reported, we have now moved to a search and recovery operation.”
The coastguard launched the search after being alerted by someone on the shore at around 4.50pm on Monday.
At the height of the search, lifeboats from Anstruther and Kinghorn were involved, as well as the Rescue 131 RAF helicopter from Boulmer and three coastguard teams from Kinghorn, Leven and St Andrews.
It was stood down as darkness fell but resumed yesterday, with local lifeboats searching the coastline.
It is understood the men were fishing for mackerel in an aluminium boat when a sudden squall overturned the vessel.
Family and friends of the men hoping for news or to join in the search for the missing duo gathered by the sea wall outside East Wemyss Angling Club, from where they had set out. Flags flew at half-mast at the gate of the club.
The families of all three men have asked for privacy.
A friend of Mr Stewart and Mr Buchan, who asked not to be named, said: “I’ve known them all my life. They had only recently taken up fishing as a hobby.
“It’s devastating. They both had wee kids too.”
Reports have circulated that the men were not wearing lifejackets on their fishing trip.
It is understood that the fishermen had been warned about the deteriorating sea conditions by fellow anglers before their boat capsized.
Alan Cunningham and Matthew Docherty, who were also fishing in the area on Monday afternoon, returned to the angling club due to the worsening conditions.
Mr Cunningham said the trio signalled that they were also to return.
Around 30 to 40 members of the Fife community have been involved in the search for the missing men, with many more walking the shoreline.
Derek McCulloch, 63, from Kennoway, had come to East Wemyss with a pair of binoculars. He said: “It’s another pair of eyes isn’t it. Where I live, I have a clear view of the Forth so I could see the entire rescue effort on Monday night. I just wanted to come today and lend a hand. It’s a real tragedy.”