An air, sea and land search was sparked on Wednesday afternoon after two children were reported missing on Caldey Island.
The 14-year-old girl and her six-year-old brother had been visiting the lighthouse with their father when they went off to look for a good vantage point to watch seals.
But when they failed to return after an hour, their father raised the alarm.
The island's coastguard team carried out a search of the area, before requesting the assistance of the Tenby coastguard unit, who were taken over to the island by the crew of the RFA Sir Galahad lifeboat.
The town's inshore lifeboat was also launched to carry out a foreshore search, while a rescue helicopter from RAF Chivenor which was in the area was scrambled to join the search, along with the Dyfed Powys Police helicopter.
The search, which began at around 2.40 pm, was called off after around half-an-hour later when the children was found safe and well with their mother at another part of the island.
Unaware of their father's concerns, the brother and sister had returned to their mother, who was on Priory Bay, and it was not until their dad went back to tell his wife to break the news that the children had disappeared that they were all reunited.
"It was a happy ending and quite an emotional reunion," a coastguard spokesman said.