The plane -- a Sukhoi SuperJet 100, the first new Russian passenger plane built in more than 20 years -- disappeared from radar screens at 2:50 p.m. local time after descending to 6,000 feet, near the 7,000-feet Mount Salak.
Around 100 people have been sent to search the area after helicopters were forced to turn back due to bad weather.
The Indonesian military said the plane fell from the sky, according to Reuters.
The last contact was when they asked for permission to descend from 10,000 feet to 6,000 feet, Transport Ministry spokesman Bambang Ervan said.
The plane was doing the first flight around midday and returned to the airport, but when it took off the second time, it lost contact around Bogor, Ervan said.
The SuperJet 100 was meant to mark Russia's re-emergence onto the international passenger airline scene, as the country's manufacturers attempted to shake off a reputation for poor safety.
The aircraft was in Indonesia as part of a Welcome Asia demonstration tour set to include countries from Pakistan to Vietnam.
I saw a big plane passing just over my house, Juanda, a villager who lives near Mount Salak, told local station TVOne, according to MSNBC.
It was veering a bit to one side, the engine roaring. It seemed to be heading toward Salak, but I didn't hear an explosion or anything.
The fateful flight was the second of the day, with an earlier demonstration passing off smoothly.
The SuperJet was developed by Sukhoi in partnership with Italy's Finmeccanica and was aimed at challenging similar short-to-mid-range, 100-seater aircraft from manufacturers such as Brazil's Embraer and Canada's Bombardier.