Aviation officials said the Bhoja Air jet, flight BHO-213, was flying from Karachi to Islamabad when it came down in bad weather minutes from landing.
Emergency teams are at the crash site, in the small village of Hussain Abad.
There are no reports of survivors. Rescue teams have been working in darkness to try to assess if there are any casualties on the ground.
The plane, a Boeing 737 believed to be carrying 121
passengers and six crew, was making its final approach to the airport when the
crash happened.
Hafeez Chachar, of the BBC Urdu service, who is near the site of the crash, says seats from the plane are strewn over a wide area.
Reporters say conditions on the ground are difficult because of heavy mud following rain.
Witness Samab Ahmad told the BBC: "I saw the plane crash land and then suddenly catch fire. It crashed on top of some sort of building, which could be residential."
Saifur Rehman, from a police rescue team, told
Pakistan's Geo TV: "The wreckage is on fire. The plane is completely destroyed."
A police official at the crash site, Fazle Akbar, told AFP news agency it would be a miracle if there were any survivors.
Relatives of those on board have gathered at Karachi and Islamabad airports awaiting news.
A Bhoja Air official in Karachi said it was making arrangements to fly one member from each family to the capital.
At Islamabad airport, one man yelled "my two daughters are dead", before slumping to the floor in a state of shock.
The uncle of the sisters, aged 18 and 20, said: "We don't even know when or where we will get to see their bodies."
Another woman at the airport was desperately trying to find out if her husband was on the flight.
Zarina Bibi said: "He called me before leaving Karachi but I don't know if he was on this flight or not."
The jet left Karachi at around 17:00 local time (12:00 GMT) and had been due to arrive at 18:50 (13:50 GMT).
There were reports of storms in the area at the time, but it is likely to take investigators weeks to determine the cause of the crash.
There have conflicting reports about the exact numbers of passengers and crew on board.
Bhoja Air is a small new commercial airline which was started about 10 years ago but closed because of financial difficulties. It recently re-opened.
In July 2010, an Airbus A321 crashed as it was about to land in Islamabad, killing all 152 people on board - Pakistan's worst-ever air disaster.
Although Pakistan's air industry has been booming, critics say standards have not always kept pace with the increase in services.
Haroon Rashid, of the BBC Urdu service, said the crash had disrupted flight schedules, with a number of planes bound for Islamabad diverted to Lahore.
