An unmanned SpaceX Falcon 9 rocket exploded minutes after liftoff from Cape Canaveral, Florida, following what was meant to be a routine cargo mission to the International Space Station.
"The vehicle has broken up," said NASA commentator George Diller, after NASA television broadcast images of the white rocket falling to pieces.
"At this point it is not clear to the launch team exactly what happened."
The disaster was the first of its kind for the California-based company headed by Internet entrepreneur Elon Musk, who has led a series of successful launches even as competitor Orbital Sciences lost one of its rockets in an explosion in October, and a Russian supply ships was lost in April.
SpaceX\’s live webcast of the launch went silent about two minutes 19 seconds into the flight, and soon after the rocket could be seen exploding and small pieces tumbling back toward Earth.
Moments later, a SpaceX commentator said the video link from the vehicle had been lost.
"There was some kind of anomaly during first stage flight," the commentator said, noting that the rocket had ignited its nine Merlin engines and reached supersonic speed.
"However, it appears something did occur during first stage operations," he added, referring to the stage of rocket flight before the cargo ship would have been able to separate from the first stage of the rocket and reach orbit.
The Dragon cargo ship was carrying 4,000 pounds (1,800 kilograms) of gear to the space station, including a large parking space, known as an International Docking Adaptor, designed to make it easier for an array of commercial crew spacecraft to dock at the orbiting lab in the future.
The capsule blasted off at 10:21 am (1421 GMT) from Cape Canaveral, Florida, atop the Falcon 9 rocket.
Countdown was normal and the weather was clear, posing no concerns ahead of the launch.
After liftoff, SpaceX had planned to make a third try at a controlled, upright landing of its Falcon 9 rocket on an ocean platform with the goal of one day making rockets as reusable as airplanes.
However, the explosion happened before the first and second stages of the rocket separated.
A press conference was scheduled for 12:30 pm (1630 GMT) to brief reporters on what happened.
Three men are currently living at the space station, including Russian cosmonaut Mikhail Kornienko and American astronaut Scott Kelly who began their year-long mission in orbit back in March.
The station commander, Russian cosmonaut Gennady Padalka, arrived with them but is only staying six months.
Padalka, 57, set a new world record on Sunday, when he became the person who has officially spent the longest amount of cumulative time in space — 804 days.
His career includes one trip to the Mir Space Station and four to the ISS.
"Padalka has traveled roughly the equivalent of four trips to Mars during his time aboard the International Space Station," said NASA commentator Diller.