Initially they thought the older boy was dead, but they realised he was unconscious and performed CPR.
Both boys were taken to hospital and doctors tried unsuccessfully to resuscitate the 2-year-old.
The 3-year-old was last night in the Starship children's hospital in Auckland and was expected to recover. His father was at his bedside.
The drowned boy's uncle, Hemi Jahnke, said the mother was devastated and in "deep, deep shock" that her son had died.
"She's in deep despair that her boy has passed. It really is tragic."
The family had a service for the boy at his mother's house last night before his mother went to Gisborne Hospital to identify his body.
"No one can really believe this had happened ... It really is a tragic accident," Mr Jahnke said.
He said the family were angry that a proper fence had not been put in place at the edge of the reserve to stop children climbing down to the river.
Last year, the Atkinson St neighbourhood had asked the local council to put a fence alongside the riverside by the reserve but nothing happened.
"This could have been avoided completely. All I know is that there was a proper fence it would never have happened."
The deaths come as Water Safety New Zealand plans a new safety campaign targeting Pacific Islanders after the drowning of five men in fishing accidents in the past month.
There have been 103 drowning deaths this year, against 87 for the whole of last year.
- Additional reporting: Vaimoana Tapaleao, APNZ
