The plane that crashed was an ATR-72 TransAsia Airways aircraft flying from Taiwan's southern city of Kaohsiung to Penghu, a popular tourist destination in the Taiwan Strait.
It was Taiwan's first fatal air crash in more than a decade and came as Typhoon Matmo struck, bringing torrential rain and high wind.
The plane crashed on its second attempt to land at the airport. It lost contact with controllers after telling them it was going around again.
The aircraft then came down in Xixi village outside the airport.
"I heard a loud bang," TV station TBS quoted a local resident as saying. "I thought it was thunder, and then I heard another bang and I saw a fireball not far away from my house."
Official said visibility at the time of the crash was 1,600m (one mile) and within acceptable standards for landing, despite the storm.
Reports from Taiwan suggested officials were looking for one person who might have been in residential buildings hit by the plane as it crashed.
TransAsia, a private airline, flies domestic routes in Taiwan and international routes in North and South-East Asia.
It has apologised and says it will compensate relatives of those on board.
This is Taiwan's worst aviation disaster since May 2002, when a China Airlines flight from Taipei to Hong Kong crashed near Penghu, killing all 225 on board.
The ATR 72 turboprop aircraft departed from the southern municipality of Kaohsiung at 17:43 local time (09:43 GMT), but lost contact with controllers at 19:06, CNA said, citing the Civil Aeronautics Administration.
TransAsia Airways' General Manager Hsu Yi-Tsung has tearfully apologised for the accident, the Central News Agency reported, pledging to spare no effort in the rescue operation and to transport relatives of passengers on the flight to Magong on Thursday morning.
Earlier on Wednesday, Taiwan was battered by strong winds and rain from a tropical storm, Typhoon Matmo.
However, an official at the Civil Aeronautics Administration told that bad weather at the time of the crash did not exceed international regulations for landing.
Typhoon Matmo had caused many flights to be cancelled but the land warning was lifted around 17:30 local time, around the time the plane took off.
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