Dramatic pictures show the mangled remains of the white Gulfstream jet after it skid off the runaway and snapped in half at Toncontin International Airport.
At least nine passengers have been rushed to nearby Hospital Escuela for treatment, though there are no reports of deaths.
Other pictures show debris from the plane, which can carry 12 people, strewn across a street as crowds and emergency crew amass.
Footage from the scene shows rescuers are attempting to pull passengers from the wreckage of the jet, which crashed at around 11.17am local time (6.17pm GMT).
Foam has been sprayed onto the jet by firefighters in an apparent attempt to quell flames from erupting.
The Gulfstream G200 plane took off from Austin, Texas, before landing at Toncontin International Airport.
The plane was taking off when it came off the runway and crashed in a busy street in the El Pedregal neighborhood of Tegucigalpa, Honduran officials said.
Those injured are believed to be US citizens, whose names haven't been released.
Federal Aviation Administration records show the plane registered to TVPX Aircraft Solutions Inc. in North Salt Lake, Utah.
Authorities have asked drivers to avoid the area.
Surrounded by mountaintops and rugged terrain, the landing strip at Tegucigalpa airport is notoriously difficult for pilots.
