Some time in the 17th century, three Spanish ships set out from port in western Mexico, sailing northwards towards Baja California under orders to obtain pearls from the natives. At this they were successful and their holds were filled with pearls, but they met with disaster nonetheless. The first ship became grounded on a sand bar, and could not be removed. The second ship was attacked by unfriendly natives and sank. The third ship, now carrying the surviving crew of the first two ships, carried on, sailing up the Gulf of California to the mouth of the Colorado River. Believing that they had found the fabled Straits of Anian (a supposed, but ultimately nonexistent, North American water route between the Pacific and Atlantic Oceans), the ship sailed up the Colorado River, eventually finding a large lake in the middle of an otherwise arid desert.
The ship sailed around the lake for a time, looking to continue the journey to the Atlantic Ocean. However it soon became clear that the water was receding and the lake shrinking. Desperate, the captain ordered the ship to sail back the way it came - but as the lake's water level dropped, the ship became mired in the mud of the lake's bottom.
The crew abandoned the ship and headed for the coast on foot, carrying all of the supplies and pearls that they could. In the end, only handful of sailors made it out alive, being rescued by Spanish ships on the coast.
Since then, people in the desert sometimes see a ship sailing above the desert floor, as if on long-vanished water, glowing with an eerie light. The ship may simply be replaying its last voyage, or it may be providing a clue as to where the remains of the corporeal ship are, so that they may be found and the ghost ship and its crew find rest.
Commentary: The story of the "lost ship of the desert" has been circulating in California, Nevada, Arizona, and northern Mexico for nearly 200 years. The apparition of a ghostly ship seems to be a new addition to the story, and the only source that I can find for it is S. E. Schlosser's book Spooky California. I have not been able to figure out whether this represents the, frankly obvious, addition of a "ghost ship" to the story by Schlosser, or if this particular element of the legend has been in circulation for a while.
Most versions of the story forgo the apparition of the ship, and focus instead on the supposed whereabouts of the ship and/or the various treasure hunters who have searched for the ship (many of them dying in the process). The story has also bubbled up into the general (non-regional) public consciousness from time to time, and been featured in many a pulp and comic adventure story.
Although Schlosser sets the story in the Mojave, the ship is more often said to have become stranded in the Salton Basin in California's Imperial County, where the large oscillating lake known as the Salton Sea exists (and was once drained). Some tellers also place the ship in the Colorado desert (more logical considering that it sailed up the Colorado River), as well as various different parts of northern Mexico and the southern U.S.
Also, the nature of the ship is different from telling-to-telling. While the ship is typically said to be Spanish, sometimes a specific captain and crew are even assigned, it has also been claimed to be English, Russian, and even a Viking ship exploring the Americas.
Ghost story or no, is it likely that the lost ship really exists? Okay, I will admit that I am a bit out of my depth on this one, but based on the knowledge I do have of the hydrological history of the American southwest, I have to say that the odds of there being any truth to this story are very, very low (edit, 8/30/2011: see * below). First off, the body of water most likely to support a sailing ship, other than the Colorado River itself, is the Salton Sea, which, from what I have been able to work out, has not been accessible from the Colorado River in many mellenia (though if any geologists/geographers out there know differently, drop me a line). Secondly, even if such a body of water were reached, it seems unlikely that a large lake would drain that quickly unless a drainage channel had just eroded through. That being said, I believe that there are cases of ships becoming stranded in areas where waters do end up receding rapidly, so remember that this is simply unlikely, not impossible. In addition, many printed versions of the story have that give-away of psuedoscholarship: "most experts say that area XX was not accessible to a ship, but those of us who believe in the lost ship know better!"
But, you know, even though I know that the likelihood of this ship being real is extremely low, and even though I doubt that it would have a hold full of pearls even if it were real...well, I have to admit that I am still very strongly tempted to go looking for it myself. I even find myself thinking about ways to build probability models for where a ship might have ended up.
The truth is, I actually don't care about whether the ship is real or not. I am tempted by the adventure of looking for it, and it's an exciting feeling. Typically, when there is a legend such as this with a ghost story attached, I feel drawn to the ghost story more than anything else...but not in this case. And I don't know why.
* I have spoken both in-person and online with geologists and hydrologists who inform me that the possibility of a lost ship is somewhat higher than I would have estimated. So, keep in mind that I am not an expert on the subject, and that there are those far more knowledgeable than I am who do not find the idea of a ship being stranded in that location to be far-fetched.
Sources: Published Book, A Whole Mess o' Magazine Articles, Internet, Personal Accounts