The C-130 Hercules aircraft, which crashed in Oum al-Bouaghi, around 500 kilometres (310 miles) east of the capital, was carrying soldiers and members of their families, said a security source.
Its source said that contact was lost with the military plane between Constantine and Oum al-Bouaghi.
Ambulances have been dispatched to the area to deal with casualties - many of whom are believed to be soldiers.