The C-130 Hercules aircraft, which was flying to the city of Constantine crashed "in poor weather conditions" in Oum El Bouaghi, some 380 kilometres east of the capital, Algerian radio said.
The plane was carrying 99 passengers -- soldiers and their families -- as well as four crew members, the source told AFP.
"There were no survivors," the source added, although army spokesman Lahmadi Bouguern said he could not confirm that all on board had perished.
Preliminary reports indicated that poor weather was to blame, with heavy snow and strong winds sweeping the region in recent days.
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The crash reportedly took place just as the aircraft began its descent into Constantine, when the plane lost contact with the control tower.
Military and civilian personnel were deployed for a search and rescue operation, with hospitals in Constantine and nearby Ain M'Lila placed on alert in case there were any survivors, the independent El Watan newspaper reported.
Extra troops and equipment have been stationed there in recent months as part of efforts to beef up surveillance of Algeria's frontiers with Mali and Libya, following a deadly hostage-taking by Islamist militants at a desert gas plant in January last year.
The city lies 1,500 kilometres from Constantine, and was the site of the last major plane crash in Algeria, in March 2003.
In that disaster, an Air Algerie passenger plane crashed on take off, after one of its engines caught fire, killing all but one of 103 people aboard, among them several French nationals.