The HANBIT-Nano vehicle lifted off on Tuesday AEDT, five days later than originally scheduled.
Just two minutes after the launch, a live feed within the official livestream showed a message noting an "anomaly" was experienced during the flight. The livestream ended immediately afterward.
According to Brazil's air force, the rocket began its vertical trajectory as planned, but an issue prompted a crash into the ground.
Officials and firefighters were sent to analyse the wreckage and the collision area, the air force added in a statement.
Innospace has not provided further information about the launch and did not immediately respond to a request for comment.
The launch was delayed from last week after an anomaly in a cooling unit component of the first-stage oxidiser feed system during final inspections, and again on Friday for a few hours due to unfavourable weather conditions.
In a previous statement, Innospace said it replaced the component on the launch pad, allowing the Spaceward mission to proceed within its December 16-22 launch window. It was launching eight registered cargoes, including five small satellites, for undisclosed customers.
The Brazilian air force and space agency offered operational support for the launch in co-ordination with key agencies.
In March 2023, Innospace had launched its test vehicle HANBIT-TLV from the same facility in northeast Brazil to verify the performance of its 150 kN hybrid rocket engine.
