The Trigana aircraft was making a short, afternoon flight from the capital Jayapura to the remote town of Oksibil.
But just before its scheduled landing, the plane lost contact with ground control.
Ten minutes before the Trigana Air plane was due to land pilots contacted the control towers at Oksibil airport asking to descend.
But at 3:15pm - the scheduled arrival time - the plane was nowhere in sight.
Indonesian Air Transportation Director General Suprasetyo says wreckage has been found.
"According to the information, the Trigana Air aircraft that lost contact was found at Camp 3, Ok Bape District in the Bintang Mountains regency. The information provided by the local residents said that the flight crashed into Tangok mountain. The detail on this finding is still under investigation."
Local villagers reported seeing the plane crash into a mountain and told authorities about the wreckage.
The ATR 42-300 twin turboprop plane was carrying 44 adults, five children and infants, and five crew.
It is not yet known if anyone survived.
Indonesian Transport Minister, Ignasius Jonan, says search and rescue teams will be sent to the crash site to confirm the villagers reports.
"The search will continue early tomorrow. The officials of the National Search and Rescue Agency will go there with the Air Transportation Director General later tonight to facilitate the evacuation work and clarify things to the families of passengers on board."
Oksibil, which is about 280 kilometres south of Jayapura's Sentani Airport, is a remote, mountainous region only accessible by plane.
Officials say weather is unpredictable in the mountainous area, and can suddenly turn foggy, dark and windy without warning.
Half an hour after the plane went missing, a second plane was sent to conduct a search of the area.
It was forced to turn back because of dangerous flying conditions.
Aviation analyst Mary Schiavo says the apparent lack of a distress call could indicate that flight crew members were too busy dealing with whatever situation arose, or that they simply didn't realise they were in trouble.
It's the latest in a string of serious incidents for the airline.
The Aviation Safety Network says Trigana Air has had 14 accidents since it began operations in 1991, losing ten aircraft in the process.
It has been on a European Union blacklist of banned carriers since 2007.
Indonesia has had two major plane crashes in the past year.
In July a military transport plane crashed in a residential area of Medan, Sumatra, claiming 140 lives.
In December 2014 an AirAsia flight crashed in the Java Sea during stormy weather, killing all 162 people on board.
That crash prompted the government to introduce regulations aimed at improving safety.
Trigana Air Stewardess, Elna Maisela, spoke outside the company headquarters in Jakarta, shortly after the flight went missing.
She hopes there are some survivors and authorities find what went wrong on the routine 40 minute flight.
"I also don't know any confirmed information, we can only hope that the flight is still there and the people on board survive."
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