Elon Musk's SpaceX Starship prototype exploded while attempting to land after an otherwise successful test launch, live video of the flight showed.
The Starship rocket destroyed in the accident at the company's rocket launch site in Boca Chica, Texas, was a 16-storey-tall prototype for the heavy-lift launch vehicle being developed by the billionaire entrepreneur's private space company to carry humans and 100 tons of cargo on future missions to the moon and Mars.
The self-guided rocket blew up on Wednesday as it touched down on a landing pad following a controlled descent.
The test flight had been intended to reach an altitude of 12,500 metres, propelled by three of SpaceX's newly developed Raptor engines for the first time.
Mr Musk tweeted immediately after the explosion that the rocket's "fuel header tank pressure was low" during descent, "causing touchdown velocity to be high".
He added SpaceX had obtained "all the data we needed" from the test and hailed the ascent a success.
SpaceX made its first attempt to launch Starship on Tuesday, but a problem with its Raptor engines forced an automatic abort just before liftoff.
The complete Starship rocket, which will stand 120 metres tall, is the company's next-generation fully reusable launch vehicle and the centre of Mr Musk's ambitions to make human space travel more affordable and routine.