An adult who helped five of the group to safety was taken to Letterkenny General Hospital.
A sixth child was rescued by a RIB.
The children were believed to have been body-boarding when they were caught in a current at Tramore strand, close to Rosbeg, outside Portnoo.
The alarm was raised by an onlooker at 1.48pm. Arranmore lifeboat was called to the scene and the Coast Guard rescue helicopter based at Strandhill, Co Sligo, was also alerted.
In all, eight people were rescued from the water.
Patsy Harkin, who witnessed the rescue, said that Paul Harkin, not a relative, was in the sea. “Paul was in the water with his teenage son. He knows the seas well and felt the current was too strong.
“Another man, Dr Kieran Harkin, was in with his three young children, who are aged between six and 11, and his brother.
“Paul brought three of the children back in to shore. Kieran brought one child into safety and went back to help his brother, who was still in the water and in serious difficulties because of the current.”
He said two lifeguards from a neighbouring beach arrived to help.
“They tried to swim out, but the current was taking them out to sea as well.
“The helicopter arrived, and landed on the beach… The tide turned then and the two men were washed close to the shore.
“My son Patrick took his RIB out. I went with him, and my brother Anthony and a neighbour Owen Harkin. We lifted the lifeguards from the water. They were fine.
“We are just delighted that everyone was gotten safely out of the water. There were definitely lives saved here today.”