The Tara Airlines plane was flying on a popular tourist route before it vanished without a trace.
It was on a 15-minute scheduled flight to the mountain town of Jomsom.
The plane took off from the resort town of Pokhara, 200 kilometers (125 miles) east of Kathmandu.
The aircraft lost contact with the airport tower shortly after takeoff.
Police official Ramesh Thapa said there was no information on the Twin Otter aircraft and a search was underway.
There were six foreigners on board the plane including four Indians and two Germans, a police official not authorised to speak to the media said.
It has been raining in the area for the past few days but flights have been continuing to operate normally.
Planes on that route fly between mountains before landing in a valley.
It is a popular route with foreign hikers who trek on the mountain trails.
Also the route is favoured by Indian and Nepalese pilgrims who visit the revered Muktinath temple.