The tragedy came just moments after the plane took off from the Boufarik military airport, with the majority of the victims soldiers and members of their families, according to the Defense Ministry.
Algerian President Abdelaziz Bouteflika has decreed a three-day national mourning, according to a statement from the President's Office.
"Following the crash of an air force Ilyushin on Wednesday in Boufarik, which killed 257 people, President Abdelaziz Bouteflika declares a national mourning of three days," the statement said.
"The president also ordered a prayer on Friday in memory of the victims," it added.
The plane crash has been confirmed by the Defense Ministry as the worst air disaster in the history of Algeria, killing all 257 people on board including 10 crew members.
Last May, three troops were killed in the northern province of Tipaza when their military helicopter crashed.
A month later, a military helicopter crashed in the province of Naama, 700 km southwest of Algiers, leaving one army troop dead.
In February 2014, 77 troops were killed when a C-130 Hercules aircraft belonging to the Algerian Air Force crashed in Oum El Bouaghi Province, 400 km east of Algiers.