The unmanned Progress M-12M vehicle failed to reach orbit and may have crashed into Siberia or Russia's Altai region.
The vehicle was carrying several tons of supplies to the astronauts aboard the International Space Station.
This is the first failure of the Progress spacecraft system since 1978.
There is currently no reports of casualties on the ground, and the orbiting astronauts have enough supplies for up to 3 months.
A Russian supply ship carrying cargo for the International Space Station on Wednesday failed to reach orbit shortly after blast-off, with reports saying it may have crashed into the Earth.
The unmanned Progress-M-12M vessel was carrying several tonnes of supplies for the international crew on board the space station but failed to reach the correct orbit, Russian space agency Roskosmos said.
"According to preliminary information, on the 325th second, there was an operating problem with the propulsion system that led to its emergency shutdown," Roskosmos said in a statement.
"The Progress M-12M cargo craft was not placed in its assigned orbit," said the two-sentence statement.
The Interfax news agency quoted a source as saying it may have crashed into Siberia while RIA Novosti said it could have hit Russia's Altai region on the border with Mongolia and China.
RIA Novosti quoted a local official in the Gorni Altai region as saying a blast had been heard at a distance of 100 kilometers but there were no reports of casualties.kilometers
The cargo vessel had blasted off at 5:00 pm Moscow time (1300 GMT) on a Soyuz-U rocket from Russia's Baikonur cosmodrome in Kazakhstan. The Interfax news agency said it was the first problem with a Russian or Soviet cargo delivery to space since 1978.
A Russian space expert said the accident should not immediately threaten the safety of the six-person crew because they had a two-to-three months supply of fuel and oxygen.
"But considering that the (US) shuttles no longer fly, Russian mission control may decide to reduce the size of the ISS crew because of supply problem," analyst Sergei Puzanov told Interfax.
RIA Novosti also reported that mission control had stopped receiving trajectory data from the craft after the apparent accident.
Another source told Interfax that the "emergency situation" occurred in the third stage of the 5:00 pm (1300 GMT) rocket launch.
"Our experts are examining the situation," the Russian space official said.
The news comes just weeks after the end of the US space shuttle program made Russia the world's only link with the ISS and its alternating multinational crew.alternating
Russia has experienced five launch failures in the past nine months but has until now not had any recent problems with Soyuz rocket missions that fly to the ISS.
Russia in December suffered one its most embarrassing space failures in recent times when three navigation satellites for the new Russian Glonass system crashed into the ocean off Hawaii instead of reaching orbit.
Officials later admitted that a simple fuel miscalculation was to blame. In February, Russia then put its new Geo-IK-2 military satellite into the wrong orbit, rendering it useless for defence purposes.
And only last week, Russia lost its new Express-AM4 digital television, telephone and Internet satellite after a failed launch from Baikonur.