Five people have died as a result of Victoria's worst civil aviation accident in 30 years, after a plane crashed into a shopping centre near Melbourne's Essendon Airport, authorities say.

Witnesses described seeing the charter plane erupt into a "massive fireball" after it smashed into the Direct Factory Outlet (DFO) centre just after 9am.

Pilot Max Quartermain was killed, and the US embassy in Canberra confirmed the other four people on board were US citizens.

"The US embassy in Canberra and US consulate in Melbourne are working closely with local authorities," an embassy statement said.

Family used social media to pay tribute to two of the victims: Greg De Haven, who was on a golf trip, and Texas lawyer Russell Munsch.

Mr Quartermain was the co-owner of Corporate and Leisure Aviation, which owned the plane.

The company's website said Mr Quartermain had over 38 years of charter experience and "an impeccable safety record".

A mayday call was put out as the plane was taking off, and Victoria Police Superintendent Mick Frewen said it appeared to be affected by a "catastrophic engine failure".

Photo: ABC / Supplied

Police said the crash occurred about an hour before the shopping mall was due to open. The plane crashed into the back of two shops, Focus on Furniture and JB Hi Fi, Mr Frewen said.

A spokeswoman for the mall's Spotlight store said part of its warehouse and dispatch area was also hit.

Twenty staff were in the building, but none were injured and all had been offered counselling, she said.

Victorian Premier Daniel Andrews said it was a desperately sad day.

"A number of people have died as a result of what is the worst civil aviation accident that our state has seen for 30 years. Our thoughts, our prayers, our best wishes and our support go to all of those who have been caught up in this."

Photo: Twitter / @MFBChief

Earlier, a state government spokesperson said a Beechcraft charter flight that was travelling to King Island had crashed soon after take-off.

Pilot radar websites indicated the plane was a Beechcraft B200 Super King Air.

Essendon Airport is a small airfield mainly used by light planes. Thirteen fire trucks were used to battle the blaze.

A witness, Michael, said he saw the crash as he was driving on the freeway.

"I saw the plane swoop down and it sort of went over the shopping centre and then there was a big explosion and a black plume of smoke that came out, he told ABC Radio Melbourne.

A section of the Tullamarine Freeway was closed after the crash. The highway remained closed inbound from M80 Ring Road to Pascoe Vale Rd/Bell St at 1pm local time (3pm NZT).

A spokeswoman for Airservices Australia said flights in and out of Melbourne's main airport were not affected.

Investigations opened into crash

There will be several investigations into the crash.

A coroner will investigate the deaths with help from Victoria Police, and the Australian Transportation Safety Bureau has sent a team of four people to the scene to investigate.

Photo: AFP / METROPOLITAN FIRE BRIGADE MEDIA

Prime Minister Malcolm Turnbull expressed his sympathies to the victims of the plane crash.

He said he was deeply saddened by the tragedy and extended his wishes to the families of those involved.

Essendon Airport and the shopping centre would remain closed until further notice to allow investigators to gather evidence, including debris.

The shopping centre also has significant structural damage and officials want to make sure the surface of the freeway has not been damaged.

Essendon Airport is a significant hub for air freight, and Mr Andrews said he had already discussed the situation with his Tasmanian counterpart, Will Hodgman.

The crash has raised questions about the safety of having two airports in such a densely populated area, however Mr Andrews said now was not the time to discuss those issues.

"The most important thing is to allow those investigations to run their course and to determine what exactly has gone on here," the premier said.

"Those facts will be established as a result of that work and then any learnings can follow those finding are fact."

- ABC / Reuters