There was no immediate word on casualties after the plane went down near the Boufarik airbase.
According to an AFP photographer at the scene, thick black smoke rose from the wreckage of the plane which crashed in a field near the base.
Hundreds of ambulances and dozens of fire trucks with their sirens wailing rushed to the scene.
The aircraft is an Ilyushin II-76, the military source told AFP, asking not to be named.
In February 2014, 77 people died when a military plane carrying army personnel and family members crashed between Tamanrasset in southern Algeria and the eastern city of Constantine.
The C-130 Hercules transport aircraft came down in the mountainous Oum El Bouaghi region.
In July 2014 an Air Algerie passenger plane flying from Burkina Faso to Algiers crashed in northern Mali, killing all 116 people on board including 54 French nationals.
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