Paul McKnight, vice president of the London, Ontario-based regional carrier, had said a fire broke out aboard the plane.
But police Constable Bill Bradshaw said the plane caught fire after impact shortly after noon local time and delayed rescue procedures.
Forty-seven survivors were taken to hospitals, but 22 still were unaccounted for when the crash site was closed for the night, said Hugh Syrja, spokesman for Dryden's emergency rescue group.
One of the 47 survivors died at a Dryden hospital, Chris Krejlgaard, a reporter for the weekly Dryden Observer, told the New York Times. Scott A. Patterson, another reporter at the scene, said he had seen 10 to 15 body bags being brought to the crash site.
Rescue work was to resume at first light, Syrja said.
Jim Harris, a spokesman for the Canadian Aviation Safety Board in Ottawa, said: "All we know is there are some fatalities. We don't know how many."
The Dutch-built Fokker F-28, a twin-engine jet, en route from Thunder Bay, Ontario, took off from Dryden Airport for Winnipeg, Manitoba, while visibility was about a half-mile, said Norm Pascoe, another spokesman for the aviation board. Winnipeg is about 200 miles from Dryden.
The plane cut a swath a half-mile long and about 100 feet wide near Dryden, a town of 6,500 people on the Trans-Canada Highway about 200 miles northwest of Duluth, Minn.
Earlier, rescuers hampered by the thickly wooded area and more than three feet of snow used snowplows and chain saws to look for survivors.
The Canadian Broadcasting Corp. said at least 40 people were taken to hospitals. A spokesman at Dryden District Hospital said many of the injured suffered fractures, burns, bruises and shock.
The CBC quoted rescue workers as saying the crash occurred in heavy bush country about a half-mile off the west end of the runway.
Sixty-five passengers and four crew members were aboard the jet when it crashed into trees after taking off from Dryden Airport, said Air Ontario's McKnight.
Jacqueline Saville, general manager of the weekly Dryden Observer, said survivors wandered out to a road, where they were picked up by emergency crews.
She said rescue crews used snowmobiles to ferry survivors from the crash site.
"You can see smoke from two miles away," Saville said. "When it came down, there was smoke."
Roxanne Groves, a nearby resident, heard the aircraft fly overhead.
"It was rumbling really bad," she said. "It didn't sound normal, and then all of a sudden, we heard a thump, a good thump. I looked out about five minutes later, and there was black smoke all over the place."
It was the first fatal crash involving a regularly scheduled commercial airliner in Canada in 10 years. In 1979, 17 people were killed in Quebec City when a Quebecair Fairchild 27 went down.
The worst air disaster in Canada occurred in 1985, when 256 people, mainly U.S. servicemen, died in the crash of a chartered Arrow Air DC-8 in Gander, Newfoundland.
Air Ontario is what its owner, Air Canada, calls a "connector" airline focused primarily on flying passengers between smaller Ontario towns and the Toronto hub airport.
The F-28 was built by Fokker, in the Netherlands, in collaboration with MBB in Germany and Short Brothers in England. Air Ontario has two Fokkers in its 21-plane fleet.
The jet model was built between 1967 and 1986.