The ATR plane operated by Aseman Airlines disappeared from radar screens some 20 minutes after take-off from Tehran.
Emergency service officials say the aircraft is believed to have crashed around the central city of Semirom, 500 km south of Tehran.
According to Chairman of the Iranian Parliament's National Security and Foreign Policy Commission Alaeddin Boroujerdi, the plane was carrying 66 people, including six crew.
Foggy weather has hampered aerial rescue efforts in the Padena mountainous area, where the crash is believed to have happened, officials said.
Pir-Hossein Koulivand, the head of Iran’s Emergency Medical Services, said 50 to 60 people are believed to have boarded the plane, adding that a helicopter has been dispatched for search.