Both men are from Winnipeg, according to RCMP.
The 64-year-old was the pilot and the other man was the sole passenger.
The two-seater Red Acro II aircraft took off from the Manitou airport then turned back but for reasons still being investigated, the pilot lost control and the plane crashed in a lagoon, RCMP said.
The crash was reported just before 8 p.m. CT, about 1.6 kilometres north of the town, according to police.
Russell Langseth, who was on the grounds at the airport, said he believes the plane was destined for an airport in the Winnipeg area.
He watched in shock as it crashed.
“It looked as though he started into a roll and then leveled off and then for some reason angled down into the lagoon,” Langseth said.
When the plane went down, several people in the area rushed to help.
“I think it was three fellows that were there ahead of me [and] they waded out to the wreckage. You couldn't see too much of it. It was mostly submerged,” Langseth said.
Two investigators from the Transportation Safety Board were reported to be on their way to the crash site at 7 a.m. Thursday.