A Russian rocket carrying three navigation satellites worth around €153m crashed shortly after lift-off from the Russian-leased Baikonur launch facility in Kazakhstan this morning after its engines suddenly switched off.
The accident led to a large spill of heptyl, a highly toxic rocket propellant.
However, there were no reports of casualties or of any immediate threat to nearby settlements.
State-run Rossiya-24 television showed footage of the Proton-M booster rocket veering off course seconds after lift-off.
It fell apart in flames in the air and crashed in a ball of fire near the launch pad.
Interfax news agency quoted an unnamed source as saying launch-pad personnel were in bunkers when the rocket lifted off.
Russia's space agency Roscosmos said the accident had been caused by the emergency switch-off of the rocket's engines 17 seconds into the flight.
Russia's state-run RIA news agency said the switch-off could have been caused by a problem with the engine or the guidance system.
The rocket contained 172 tonnes of highly toxic heptyl propellant, Kazakh Emergencies Minister Vladimir Bozhko told an emergency government meeting.
Talgat Musabayev, head of Kazakhstan's space agency Kazcosmos, said nitric oxide - a product of burning heptyl - was much less toxic for humans.
He said it was raining in the area, so toxic clouds would probably not reach the town of Baikonur 60km away.
However, authorities instructed locals to stay at home and not to open windows, and ordered to close shops and public catering, said Kazakh Interior Minister Kalmukhambet Kasymov.
The estimated loss from the three satellites, meant for Russia's troubled Glonass satellite navigation system, was about €153m, Rossiya-24 reported.
Russia plans to spend more than 300bn roubles (€7bn) by 2020 on Glonass, its answer to the US GPS system.
The system, first conceived by the Soviet Union more than 40 years ago, has been plagued by failed launches, including one in 2010 in which three satellites were also lost, and by suspicions of corruption and embezzlement.
Its chief designer was dismissed last year during a fraud investigation.
Russia is increasing spending on space and plans to send a probe to the moon in 2015, but the pioneering programme that put the first man in space in 1961 has been plagued in recent years by setbacks, including botched satellite launches and a failed attempt to send a probe to a moon of Mars.