The search was mounted at 6pm after one man ran down Lee Stream to the Taieri River track at Outram and raised the alarm.
Six members of the group walked out and another was picked up by the Otago Regional Rescue Helicopter at the confluence of the two waterways about 11pm, leaving two unaccounted for.
They were found by two LandSAR searchers with dogs about 4km inland from George King Memorial Dr, towards Lee Stream, after the searchers heard voices at 12.45am.
The pair were winched up by helicopter and flown to Taieri Airfield, where they were met by family and others from their party.
Fourteen Dunedin water rescue squad and LandSAR staff and four dogs were involved in the search.
The group had not been wearing life jackets, were lightly clad and many had bare feet.
Search and rescue co-ordinator Senior Sergeant Brian Benn said a lack of preparation had let the group down.
''It was such a nice day and a great plan, but they had not really talked to anyone before going into the area.''
People intending to float down a waterway should research it before setting off.
''You need to know where you're going and what it's like before you go in there.''
The group had entered Lee Stream at George King Memorial Dr with two cheap rubber boats and other flotation devices, Snr Sgt Benn said.
But Lee Stream proved too shallow and rugged.
After one man left to raise the alarm, the eight split into two groups about 5pm.
Three of the party carried on down the river and the larger group climbed up on to farmland and contacted family members, he said.
Eight searchers with dogs had gone up the track from Outram Glen to Lee Stream. Two searchers went up George King Memorial Dr to check farmland above Lee Stream.
One of those who walked out, Nick Paterson (22), said the group had underestimated the depth of Lee Stream.
Its shallowness and ruggedness meant the group had to carry the inflatable devices in the stream.
He was thankful his friend ran out and raised the alarm.
He and the others ''feel like right dicks'', he said.
