Air force spokesman Bambang Sulistyo said the C-130 Hercules, carrying 112 passengers and crew, was on a routine training mission when it crashed near an air force base in East Java province.
It smashed into four houses in Gaplak village, before skidding into a rice field.
The country's air force has long complained of being underfunded and handicapped by a recently lifted U.S. ban on weapons sales. It has suffered a series of accidents, including a Fokker 27 plane that crashed into an airport hangar last month, killing all 24 onboard.
A series of commercial airline crashes in recent years has killed more than 120 people in Indonesia.
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