The NSW Rural Fire Service said local ground crews lost contact with the C130 Hercules before 1.30pm on Thursday in the Snowy Monaro region.

The plane, known as Zeus, was owned and operated by Canada-based company Coulson Aviation and contracted to the RFS.

After departing Richmond RAAF base in western Sydney at 12.05pm, online flight radars showed the tanker flying southwest before vanishing near Peak View northeast of Cooma.

"All three occupants on board were US residents," RFS commissioner Shane Fitzsimmons said.

"Tragically there appear to be no survivors as a result of the crash. It's impacted heavily with the ground and initial reports are that there was a large fireball."

The company grounded its fleet in NSW and Victoria in an attempt to rule out systemic issues such as possible fuel supply problems.

The company's owners are travelling to Australia and are expected to arrive in the next 24 hours.

"The aircraft had departed Richmond with a load of retardant and was on a firebombing mission," the company said in a statement.

"The accident is reported to be extensive and we are deeply saddened to confirm there were three fatalities."

Authorities said the names of the victims wouldn't be released until their families had been informed.

The cause of the crash will be investigated by the Australian Transport Safety Bureau with support from NSW Police.

The RFS has contracted aircraft from Coulson for the past five years and Mr Fitzsimmons paid tribute to the crew who he said were well known to local firefighters.

"The firefighting fraternity is a tight-knit family, a fairly small family and the crew on board were well known, not just to their colleagues here in Australia," the commissioner said.

"Our hearts are with all those that are suffering what is the loss of three remarkable, well-respected crew that have invested so many decades of their life into firefighting."

NSW Premier Gladys Berejiklian said the crash was a "stark and horrible reminder" of the dangerous conditions facing firefighters on a daily basis.

"It allows us to consider the circumstances people face every day," Ms Berejiklian said.

"We have more than 1700 volunteers and personnel on the field today."

Prime Minister Scott Morrison tweeted: "Deeply saddened to learn of the death of 3 people in the crash of a C130 fire fighting aircraft, northeast of Cooma in NSW earlier today."

"My deepest condolences to the loved ones, friends and colleagues of those who have lost their lives. Such a terrible tragedy."

Federal Opposition leader Anthony Albanese said the crash was "yet another tragic reminder of the extraordinarily dangerous conditions our emergency workers are facing".

The NSW death toll from this season's unprecedented fires has now climbed to 24 while more than 2000 homes have been razed.

Australian Associated Press