Mr Waterson said he was about to call 111 but realised help wouldn't arrive fast enough so "took off down onto the beach" on his 4WD.
At the same time a man about 1km down the beach, who is believed to be the woman's partner, was alerted by other children.
The distressed man met Mr Waterson just as he was heading into the water. He was "pretty anxious about what was going on," and jumped on the 4WD too.
Mr Waterson said the boy managed to escape the rip and make his way to shore but his mother was unable to get in so the men went straight out to her.
"I went out on the water in the 4WD, it was floating along ... It was probably a metre or so deep when we got to her.
"By the time I got to her she was very exhausted. I said to him, 'just grab her under her arms and we'll get her up onto the beach'."
By the time they got the woman to shore emergency services were on their way. The mother and child were taken into a house where the woman vomited up sea water. They were comforted until paramedics arrived.
"When they got her on the stretcher she thanked me for what I had done. I said it was the least we could do. At least we saved a life. She's going to be sore and sick for a day or two with the amount of water she took on but hopefully she'll recover pretty quickly."
Mr Waterson said the boy was in shock but had clearly been a good swimmer which helped him get back to shore once he'd cleared the rip.
He had been involved in several previous incidents at the beach.
"I have done it several times over the 30-odd years I've lived here. We've had some sad times, we have had loss of lives."
The woman and her son were flown to Hawke's Bay Regional Hospital by the Lowe Corporation Rescue Helicopter.
Pilot Jeremy Bruce said the mother had swallowed a lot of water and was in a moderate condition.
Mr Waterson believed the family were renting a beachside home.
A spokeswoman for Hawke's Bay Regional Hospital said the pair were in a stable condition last night.
The boy was discharged last night, and his mother was discharged this morning, she said.
- additional reporting Patrice Dougan