Japan's coast guard said it found what appeared to be wreckage from the tilt-rotor V-22 Osprey and one person who was later confirmed to have died 3km from Yakushima island.
Fishing boats in the area found three people in the surrounding waters, a representative of a local fisheries co-operative said, adding their condition was unknown.
Another Osprey landed safely at the island's airport on Wednesday afternoon around the time of the crash, a spokesperson for the local government said.
US forces in the region were still gathering information, a spokesperson said.
The United States has about 54,000 US troops in Japan, many in the strategically important southern island chain, amid growing Chinese military assertiveness in the South China Sea.
The crash happened just before 3pm, with witnesses saying the aircraft's left engine appeared to be on fire as it approached an airport for an emergency landing, despite clear weather and light wind, media reported.
The coast guard corrected the number of people on board the plane to six from an initially announced eight.
Yakushima is in Japan's Kagoshima prefecture, some 1040km southwest of the capital Tokyo and known for its World Heritage-accredited wildlife and forests.
Japan, which also operates Osprey aircraft, said on Wednesday it had no plans to ground the aircraft but had asked the US military to investigate the crash.
Developed jointly by Boeing and Bell Helicopter, the Osprey can fly both like a helicopter and fixed-wing aircraft and is operated by the US Marines, US Navy and Japan's defence forces.
The deployment of the Osprey in Japan has been controversial, with critics saying it is prone to accidents.
The US military and Japan say it is safe.
In August, a US Osprey crashed off the coast of northern Australia while transporting troops during a routine military exercise, killing three US Marines.
Another crash-landed in the ocean off Japan's southern island of Okinawa in December 2016, prompting a temporary US military grounding of the aircraft.
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