The Malaysia Airlines Boeing 777 was flying from Amsterdam to Kuala Lumpur carrying 280 passengers and 15 crew.
"Nearly 300 people died when a Malaysia Airlines Boeing-777 crashed in eastern Ukraine," an advisor to the Ukrainain Interior Minister, Anton Herashchenko, said.
"It was flying at the altitude of 10,000 meters. 280 passengers and 15 crew members died," he said in a Facebook post.
The plane disappeared from the radar and teams from the emergency services were trying to reach the scene, Russian media quoted an unnamed security source as saying.
Malaysia Airlines said it lost contact with Flight MH17 at 1415 GMT (8:45 IST).
Burning aircraft wreckage and bodies strewn on the ground were seen at the village of Grabovo, some 40 kms from the Russian border in an area where pro-Russian rebels are reportedly active.
Malaysia's Star newspaper quoting sources said the plane was "shot down" while cruising at an altitude of 30,000 feet.
Ukrainian President Petro Poroshenko said that the jetliner may have been shot down over his country's airspace.
Ukrainian officials have accused pro-Russian rebels of being responsible for shooting down the plane.
"We do not exclude that the plane was shot down and confirm that the Ukraine Armed Forces did not fire at any targets in the sky," Poroshenko said in a statement posted on the president's website.
"I am shocked by reports that an MH plane crashed," Malaysian Prime Minister Najib Razak said on his Twitter feed.
"We are launching an immediate investigation," he said as he rushed to the Kuala Lumpur airport.
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