The 17-minute video, apparently smuggled out of a rebel base in Ukraine, shows the rebels handling the bodies as they express shock that the aircraft they brought down was a commercial one and not a fighter jet.
The video was released by Sydney's Daily Telegraph on the anniversary of the attack, which killed all 298 people aboard the Boeing 777, en route to Kuala Lumpur from Amsterdam on July 17 last year.
The footage shows the uniformed rebels examining the contents of backpacks and collecting phones and other items as they try to find the black box.
The rebels appear to be surprised that the aircraft was a commercial airliner, not a fighter jet, and can be heard saying "civilians, civilians" and "this is a passenger plane" in Russian.
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Australia's foreign minister Julie Bishop described the video as "sickening to watch" and said it was further evidence that the attack was deliberately carried out by a missile.
Prime Minister Tony Abbott said the video further highlighted that "this was an atrocity, it was in no way an accident".
"They may not have known that they were shooting down a passenger plane but they were deliberately shooting out of the sky what they knew was a large aircraft.
"Rebels don't get hold of this kind of weaponry by accident. I mean, this was obviously very sophisticated weaponry. We are confident that it was weaponry that came across the border from Russia, fired, and then shortly thereafter, once it was realised what had happened, went back into Russia," he told ABC News.
"I am not suggesting that the Russian President knew anything about this in advance," he said, adding: "I suspect, based on my own conversations with him last year, that he is horrified that all of this has happened."
The distressing and graphic footage of militiamen trampling over the charred wreckage site could prove crucial to the probe, clearly identifying armed men on the scene.