Navy ships and aircraft had been searching since the afternoon when the plane lost contact with air traffic controllers.
Most of those on board were thought to be women and children who were travelling from the southern city of Myeik to Yangon.
"Now they have found pieces of the damaged plane in the sea 136 miles (218 km) away from Dawei city," said Naing Lin Zaw, a tourism official in Myeik, citing the military and adding that they were still searching the sea.
An air force source confirmed to AFP that a navy search and rescue ship had found debris in the sea an hour's flight south of Yangon, Myanmar's commercial capital.
The commander in chief's office said the plane lost contact at about 1:35 pm (07:05 GMT) off Myanmar's southern coast.
A spokesman from the military's information team said two-thirds of passengers on board were women and children.
"Some were on their way for medical checkups and to attend school," the colonel in Naypyidaw told AFP, refusing to confirm what rescuers had found and adding the search was ongoing.
There was conflicting information about the number of people on board.
Giving an updated figure, the commander in chief's office said 106 passengers were on board -- soldiers and family members -- along with 14 crew.
Several navy ships and air force planes were sent to search for the aircraft, which was flying at an altitude of more than 18,000 feet (5,486 metres).
It is monsoon season in Myanmar but there were no reports of bad weather at the time the plane went missing.
- Military air woes -
The plane was a Y-8F-200 four-engine turboprop, a Chinese-made model still commonly used by Myanmar's military for transporting cargo.
The former military junta bought many of the aircraft from Myanmar's giant neighbour during their 50 years of isolated rule, when they were squeezed by Western sanctions.
A former executive at the aviation ministry said many of the aircraft in Myanmar's fleet were old and decrepit.
"Myanmar air force has (a) very bad safety performance," he said, asking to remain nameless.
However the army said the missing plane was delivered in March last year and had logged 809 flying hours.
Soldiers guarding the military base at Yangon airport refused to speak to AFP journalists.
Myanmar's military fleet has a chequered recent history of plane crashes.
A five strong crew died when an air force plane burst into flames soon after taking off from the capital Naypyidaw in February last year.
Three army officers were also killed in June when their Mi-2 helicopter crashed into a hillside and burst into flames in south-central Bago.
A surge in demand for air travel as Myanmar opens up has stretched the impoverished country's aviation infrastructure, in particular in remote airports.
Commercial jets have also suffered frequent incidents.
The worst in recent years was in 2012 when an Air Bagan jet crash-landed in thick fog and burst into flames short of the runway at Heho airport, killing one passenger and a motorcyclist on the ground.