The hot air balloon carrying 21 people caught fire mid-air before crashing to the ground, General Mamdough Khaled, director of security for Luxor Governate said in a statement.
Luxor International Hospital received 19 badly burned bodies, Khaled said.
The balloon was operated by a company named Sky Cruise, state-run MENA news agency reported.
Ahmed Aboud, who runs another balloon company, was quoted by the media as saying that gas tanks ignited the balloon about 1,000 feet.
Passengers in the balloon included 19 foreign tourists, nine from Hong Kong, four from Japan, three from Britain, two from France and one from Hungary, officials said.
An Egyptian pilot and another Egyptian were also on board, Luxor province spokesman Badawi al-Masri said.
Balloon rides offering scenic aerial views of the Nile river and the ancient temples of Karnak and Hatshepsut are a popular tourist attraction in Luxor, about nine hours' drive southeast of Cairo.
The catastrophe may be the deadliest hot air balloon accident in history.
Luxor lies on the banks of the river Nile and is home to some of Egypt's most famous pharaonic-era ruins.
US photographer Christopher Michel was in another balloon, taking some aerial shots, at the time.
"We flew over the ancient ruins. Just before landing in the cornfields, I heard an explosion and saw smoke. I think it was the balloon behind mine," he was quoted by the BBC as saying.
"I wasn't sure what had happened at first. It was only when we landed we heard the full extent of what happened," he said.
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