The Italian coast guard said it was now heading to the port of Crotone after a rescue team managed to board the ship.
The Ezadeen, sailing under the flag of Sierra Leone, lost power in rough seas overnight off the south-east of Italy.
Almost 1,000 migrants were rescued from another ship found abandoned without any crew earlier in the week.
Italian Coast Guard Cmdr Filippo Marini told reporters that the vessel was being towed by an Icelandic ship that is part of the EU Frontex border control mission.
Children and pregnant women were among the migrants, most of who were believed to be Syrian, Mr Marini said.
He added that the 73-metre (240ft) Ezadeen was believed to have set sail from Turkey, although earlier reports suggested it was sailing from Cyprus.
The alarm was raised in a distress call from one of the migrants using the maritime radio on board, who told the Italian coast guard: “We’re without crew, we’re heading toward the Italian coast and we have no-one to steer.”
The Ezadeen was built nearly 50 years ago and is a livestock carrier. It appears to be registered to a Lebanese company and has come under the control of human traffickers.