"Our teams have now reached the site and I can confirm that there are no survivors. All 14 people are dead," said Bimlesh Lal Karna, head of rescue operations with the civil aviation authority.
The Agni Air plane was returning to Kathmandu after it was unable to land at Lukla, its intended destination in a popular trekking spot in the Everest region of eastern Nepal, home ministry spokesman Jayamukunda Khanal told AFP.
Thousands of travellers fly into Lukla, 140 kilometres (90 miles) northeast of Kathmandu, every year to access the stunning Himalayan range that forms Nepal's northern border with Chinese-controlled Tibet.
Local villagers said they saw the plane crash into a field next to a school about 15 miles south of Kathmandu and break up on impact. The cause of the crash was not immediately clear.
"There are small pieces of the plane all over the field and you can see body parts. We are all so shocked," villager Pratap Lama told the Kantipur radio station.
Relatives of some of the passengers gathered at the airport in Kathmandu to wait for news.
"My cousin is a trekking guide and he was flying up to take a group of tourists to Everest base camp," Ganesh Rijal, 40, told AFP.
"He got married recently and his wife is in deep shock. I have been waiting here for hours, but nobody has been able to tell me anything."
The 550-metre-long (1,800 feet) sloping airstrip at Lukla, perched on a hillside 2,757 metres above sea level, is considered one of the most difficult landings in the world.
The last major accident there was in 2008 when a Twin Otter plane carrying 18 people crashed killing everyone on board.
The airport is used by climbers heading for the heights of Everest, though now is the low season for both mountaineering and trekking.
Tourism is a major foreign currency earner for impoverished Nepal and the number of visitors has increased since a civil war between Maoist guerrillas and the state ended in 2006.
Earlier this year, the government announced an ambitious plan to attract a million tourists to the country in 2011 -- around twice the number that visited in 2009.