Investigations are underway to determine how a skydive turned deadly for two experienced instructors and a mother-of-eight in North Queensland.

Kerri Pike, 50, was tandem skydiving with an experienced instructor, Peter Dawson, when the accident took place at Mission Beach yesterday afternoon.

The skydive was a 50th birthday present given to Mrs Pike the previous night.

The pair were found in a tree about 1.5km away from the regular landing zone at Mission Beach while another instructor, Toby Turner, was found in a nearby backyard.

Victims Peter Dawson, Kerri Pike and Peter Dawson. (Facebook/Toby Turner/Acromanic Dawson)

Kerri Pike, a local mother, was one of three people killed in the horror accident (Supplied) (Supplied)

An eyewitness told The Cairns Post he could do nothing as he watched the incident unfold.

"You could see one chute was tangled and it wasn't opening," the unnamed man said.

"I was just watching him in free fall until he went behind the trees, and that was the last I saw.

Peter Dawson and Toby Turner.

"It wasn't good to watch. I had my heart in my mouth."

A parachute is seen in a tree at the scene of a skydiving tragedy at Mission Beach in Queensland. (ABC)

Police said the solo skydiver may have collided with the tandem skydivers in mid-air, with their parachutes failing to open properly.

It's believed six of Ms Pike's eight children were watching as she plummeted.

“They’re absolutely gutted,” Cassowary Coast Mayor John Kremastos said.

The three divers were pronounced dead at the scene.

Police are investigating the cause of the accident that killed three people.

Police and emergency services attend the scene.

Operating company Skydive Australia released a statement that said Mr Turner, 34, was a "highly experienced instructor who had completed thousands of jumps".

"The other two (Mr Dawson, 35, and Ms Pike) were jumping as a tandem pair: a highly experienced instructor and a customer," it said.

Skydive Australia confirmed it had suspended operations at Mission Beach while investigations into the incident continued.

Staff and the families of those involved have also been offered counselling.

"The company extends its deepest sympathies and heartfelt condolences to the individuals and families involved and the broader skydiving community," it said.

Mission Beach. (File Image/AAP)

The deadly dive was captured on the instructors helmet cameras, which will help investigator piece together what happened.

It is now the nation’s worst skydiving accident in more than 40 years.