The crash occurred Wednesday soon after takeoff from the Boufarik air base southwest of the capital Algiers.
The aircraft that crashed on Wednesday was a Russian-built Ilyushin Il-76 military transport plane. The Defense Ministry expressed condolences to the families of the victims.
The Iliushin-type military aircraft crashed near an air base in Boufarik, located about 30 kilometers (20 miles) southwest of the capital Algiers, the state-run Algerie Presse Service reported.
The plane was bound for Tindouf in southern Algeria, a region bordering the disputed territory of Western Sahara. The military statement added that Gen. Gaid Salah, head of the army, had gone to the site and ordered an investigation into the crash.
Algerian TV network Ennahar published images of body bags lined up in a field after the crash.
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The Il-76 model has been in production since 1970s and has an overall good safety record.
Two Algerian military planes collided mid-flight in December 2012 during a training exercise in Tlemcen, in the far west of the country, killing the pilots of both planes.
An Algerian civil protection agency spokesman said the "provisional" death toll from the crash on Wednesday is 257, but some survivors were rescued.
Algeria has suffered a string of military and civilian aviation disasters.
In February that year, an Algerian Air Force Lockheed C-130 Hercules crashed in a mountainous area in eastern Algeria killing 77 passengers and leaving one survivor.