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.