Marine Rotational Force Darwin, a United States Marine Corps Marine Air-Ground Task Force based in the NT said the incident happened at 9.30am on Sunday.
"There were a total of 23 personnel on board," it said, in a statement.
"Three have been confirmed deceased while five others were transported to Royal Darwin Hospital in serious condition."
Air traffic control recordings revealed the pilot declaring an emergency.
"We are just declaring an emergency on behalf of dumptruck 11 flight single MV 22 in the vicinity of Melville Island," they said.
When asked if there was a fire he replied there was a "significant fire in the vicinity of the crash site".
NT Chief Minister Natasha Fyles held an emergency cabinet meeting after the crash, which she described as a "terrible incident".
"Australia and the US are working together to respond to this incident," Fyles said.
NT Police Commissioner Michael Murphy said two Bell Boeing V-22 Osprey tiltrotor aircraft took off from Darwin heading to the Tiwi Islands on Sunday morning.
They were part of exercise Predators Run, which involves the militaries of the United States, Australia, Indonesia, the Philippines and East Timor, the Australian Defence Department said.
The islands are 80 kilometres from Darwin.
Reports came in that one of the aircraft had crashed two kilometres inland on Melville island, Murphy said.
An emergency operation centre monitoring bushfires was redirected to launch a rescue mission, with the ADF, CareFlight, Royal Flying Doctor Service, the National Critical Care and Response Centre and police also involved.
"Those injured are 23 US marine corp soldiers and we are doing everything we can to return them safely back to Darwin for treatment," Murphy said.
"Five marines have been returned to Darwin for treatment with the remaining being triaged at the scene."
A code brown was declared at Darwin hospital to indicate the incident could impact the facility, Fyles said.
Australian Prime Minister Anthony Albanese described the crash as a "difficult incident".
"Our thoughts and deepest condolences are with the three US service personnel who lost their lives, those who have been injured, the rest of the crew and indeed the entire United States armed forces," he said in a statement.
"Australian Defence Force personnel in the Northern Territory are providing support to our US partners.
"This incident is a reminder of the significance of the service undertaken by our personnel and those of our partner nations."
Since The Osprey started flying 33 years ago, 51 service members have been killed.
However it has a lower mishap rate compared to many other aircraft flown by the US military.
The Osprey is a tiltrotor aircraft.
It takes off like a helicopter, then the engines tilt forward enabling it fly at much faster speeds than a helicopter.
Some were grounded after a fatal crash in California this year.
An Osprey crashed off Rockhampton in 2017 after clipping the deck of a US ship, killing three US Marines.
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2023-08-27 09:13:23Z
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