Officials said the Hercules C-130 plane erupted in a large fireball on impact in a national park the Snowy Mountains shortly before 1:30 pm (0230 GMT).
Three American crew helping to battle Australia's devastating bushfires were killed Thursday when their water-bombing plane crashed in mountainous terrain during a sortie to tackle another outbreak of the deadly blazes.
The cause of the crash was not immediately known, but New South Wales Rural Fire Service Commissioner Shane Fitzsimmons had said earlier in the day that high winds were making flying the water tankers "very difficult".
"We've got a number of firefighters and a number of crew that is in the area and working to contain and work around the fire," Fitzimmons said. The incident brought the death toll in Australia's bushfires to at least 32 since the crisis began in September.