The Tupolev Tu-154 disappeared from radar two minutes after taking off from Sochi at 05:25Am local time, heading for Latakia in Syria, the defense ministry said.
Debris and 11 bodies have been found, with no reports of survivors.
The plane was carrying soldiers, reporters and 64 members of the famed Alexandrov military music ensemble who were to perform for Russian troops.
More than 100 divers are involved in a round-the-clock search operation at the site of the crash, the defense ministry says.
Russia’s transport minister says investigators are looking into an “entire spectrum” of possible reasons the crash occurred, including the possibility of a terror attack.
Earlier, a Russian official had downplayed any suggestion of a terror attack.
President Vladimir Putin has said December 26 will be a day of national mourning.
The flight had originated in Moscow and landed at Adler airport in Sochi for refueling.
The defense ministry said in a statement: “Fragments of the Tu-154 plane of the Russian defense ministry were found 1.5km [one mile from the Black Sea coast of the city of Sochi at a depth of 50 to 70m [165-230ft.”
Ministry spokesman Maj-Gen Igor Konashenkov said: “No survivors have been spotted.”
An audio recording played on Russian media and said to be of the final conversation between air traffic controllers and the plane reveals no sign of any difficulties being faced by the crew.
Voices remain calm until the plane disappears and the controllers try in vain to re-establish contact.
Reports from the area said flying conditions were favorable.
Gen. Igor Konashenkov said the plane was last serviced in September and had undergone more substantial repairs in December 2014. It had an “experienced” pilot.
President Vladimir Putin has ordered a state commission to look into the crash and sent his condolences to the families and friends of the victims.
The defense ministry has published a passenger list, showing that 64 of those on board were from the Alexandrov Ensemble, including its director, Valery Khalilov.
There were 9 journalists, 8 soldiers, two civil servants and eight crew members.
Also on board was Elizaveta Glinka, known as Dr. Liza, the executive director of the Fair Aid charity and the inaugural winner of Russia’s state prize for achievements in human rights.
The Alexandrov Ensemble was scheduled to perform a New Year’s concert at Russia’s Hmeimim air base near Latakia.
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