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The plane, a domestic flight from Karachi operated by the private company Airblue, came down in hills just north of the city as it was about to land.
There is no word on the cause of the crash. At the time the area was shrouded in fog.
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“Start Quote
The air was heavy with a deathly smell of petrol, smoke and charred flesh”
End Quote Zeesha Zafar BBC News, Islamabad
* Smoke, rain and bodies
Pakistani TV showed images of smouldering wreckage on a foggy hillside, with helicopters overhead.
Imtiaz Elahi, chairman of the Capital Development Authority, which deals with emergencies, said the crash was "heartbreaking".
"It is a great tragedy, and I confirm it with pain that there are no survivors," he told the Associated Press news agency.
The plane, reported to be an Airbus A321 with 146 passengers and six crew on board, is thought to have left Karachi at 0750 (0350 GMT).
Analysis
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image of Syed Shoaib Hasan Syed Shoaib Hasan BBC News, Karachi
Airblue is the largest of the private airlines which have sprung up in Pakistan in recent years.
The company and civil aviation officials say there was nothing in conversations between the pilot and the Islamabad control tower that suggests anything was wrong.
Although the country's air industry has been booming, critics say standards have not always kept pace with the increase in services.
Pilots complain they are being forced to fly extra hours which they say leads to fatigue, a claim denied by the airlines.
Two Americans were among the victims, a US embassy spokesman said, but gave no further details.
Pakistan's interior ministry initially said at least five survivors had been taken to hospital, but local officials later said those reports were wrong. The flight data recorder has been found.
Recovery operations are being hampered by bad weather and the crash site, on a steep hill, has no roads.
The BBC's Lyse Doucet in Islamabad says helicopters found it hard to land in the midst of heavy fog, and smoke rising from the fire of the wreckage.
Aamir Ali Ahmed, a senior city government official, told Reuters news agency: "It's a very difficult operation because of the rain. Most of the bodies are charred."
Rescue worker Dawar Adnan told Associated Press from the crash site: "I'm seeing only body parts. This is a very horrible scene."
Express 24/7 television journalist Sabur Ali Sayed said: "The plane is totally destroyed, the pieces and parts scattered over a large distance."
Map of Islamabad
It is the deadliest air disaster in Pakistan's history.
Airblue spokesman Raheel Ahmed told reporters that the crash was "an extremely tragic incident", adding that an investigation had been launched.
Airblue
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File photo of one of Airblue's A321 planes
* One of Pakistan's most respected airlines
* Operates since 2004 on domestic and international routes
* Uses A320 and A321 aircraft
* Flight 202 is company's first crash
* Key factors for crash probe
* Ordeal of crash relatives
The plane had no history of technical problems, he added.
It was leased by Airblue in January 2006 and had accumulated about 34,000 flight hours.
The BBC's Haroon Rashid in Islamabad saw the plane flying low over the capital.
"I was surprised to see the plane, because the area where I live is called a no-fly zone as it is close to some of Islamabad's most important official buildings, including President House and parliament," he said.
Other witnesses saw the plane flying towards the hills, and shortly after that heard a loud explosion and smoke billowing into the air.
Express 24/7 TV reporter Anjum Rahman said she saw the plane flying over the rooftops of houses where she lives.
"I wondered why the plane wasn't flying higher as it was flying towards the hill. Then within three or four minutes I heard a
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