The single-engine propeller plane plowed into and set ablaze a row of houses just minutes after takeoff from an airport used by small aircraft about 500 metres away in Tokyo's western suburb of Chofu.
Television footage showed a mangled plane, broken up with its tail upside down, resting on a crushed car in a residential lot as dozens of firefighters battled the blaze and treated the victims.
The roofs of the two houses next to the site were also damaged.
Tokyo Fire Department spokesman Teruaki Seki said the dead included the pilot, one of the four passengers and a woman who was inside the house where the plane crashed into, setting it ablaze. Five others, including the three remaining passengers and two people on the ground, were taken to hospitals, but their conditions were not immediately known.
Plane operated by private company
The plane was operated by a private company for aviation training and other activity, not for commercial air travel, said Hideaki Kobayashi, the Tokyo metropolitan government official in charge of the Chofu Airport.
Police are investigating the cause of the crash.
Minako Akiyama, a resident in the neighbourhood, said that after the crash, she heard the loud sound of something being torn. "I ran upstairs, then I saw the house just over there on fire, with a tail of the plane sticking out of it," she said.
The PA-46 Mirage plane, produced by Piper Aircraft, was flying to Izu Oshima Island, about 100 kilometres south of Tokyo in the Pacific Ocean, according to the Chofu Airport. The airport was opened in 1941 for Japan's Imperial Army during the Second World War and is now administered by the Tokyo metropolitan government.
The plane that crashed Sunday also experienced an accident in October 2004, when it crashed into a field in the northern Japanese city of Sapporo in a failed takeoff, according to a transport ministry report. Nobody was injured in that accident, which the ministry attributed to operational error. The aircraft had since been repaired.