"In keeping with procedures, Air Algerie has launched its emergency plan," Air Algerie officials, quoted by APS news agency (in French), said.
Algerian Prime Minister Abdelmalek Sellal reportedly told Algerian radio: "The plane disappeared at Gao (in Mali), 500km (300 miles) from the Algerian border."
Bad weather
UN troops in Mali say they understand the plane came down between Gao and Tessalit, the BBC's Alex Duval Smith in the Malian capital Bamako reports.
Brigadier General Koko Essien, who is leading the UN troops, told the BBC that the area leading up to the Algerian border was vast and sparsely populated.
He added that weather in the area had been bad overnight.
Armed groups are also said to be active in the area. However, at the moment the most probable scenario looks like a plane that came down in bad weather, our correspondent adds.
'Change of course'
The plane is operated by Air Algerie and chartered from Swiftair.
In a statement (in Spanish), Swiftair said that the aircraft was an MD83 and that they were unable to establish contact with it.
An Algerian official had previously told Reuters that the plane was an Airbus A320.
An unnamed Air Algerie company source, speaking to AFP news agency, said: "The plane was not far from the Algerian frontier when the crew was asked to make a detour because of poor visibility and to prevent the risk of collision with another aircraft on the Algiers-Bamako route."
"Contact was lost after the change of course."
Flight AH 5017 flies the Ouagadougou-Algiers route four times a week, AFP reported.
French Transport Minister Frederic Cuvillier told reporters that it was likely there were also many French nationals on board the plane.
In February a military plane in Algeria crashed, killing 77 people on board.
The Hercules C-130 crashed into a mountain in Oum al-Bouaghi province, en route to Constantine, in bad weather conditions. Only one person on board survived.