The historic Hawker Hunter aircraft, taking part in the Shoreham Airshow on the southeast coast, hit several cars, creating a fireball and sending thick black smoke billowing into the sky.
Footage of the crash showed the jet carrying out a loop manoeuvre high in the air. The plane banked up steeply, turned over but did not complete the loop in time to avoid hitting the ground. The jet ploughed into bushes by the roadside.
The pilot did not appear to deploy the ejector seat.
The South East Coast Ambulance Service confirmed the death toll.
"SECAMB confirm seven fatalities from the crash at the Shoreham air show today. Thoughts are with the families and loved ones," the emergency service said on Twitter.
West Sussex Police said one casualty was in hospital with serious, life-threatening injuries, while a further 14 were being treated for minor injuries.
The crash happened at around 1:20pm (1220 GMT). The plane hit the A27, a major road that runs along England's southeast coast.
Eyewitness Chris Watkins told the BBC: "The Hunter came across the airfield, did a turn behind us and as it swooped down to do its run across the airfield it just ploughed straight in to the road and the trees."
- 'Not going to make this' -
Stephen Jones added: "He made a quick pass along the crowd line and pulled up into a loop and as he came out of it, I thought, 'this is wrong, you're too low, you're not going to make this.'
"He just disappeared behind some low trees at the edge of the airfield and then there was a huge explosion."
Gairo Gomez, who works nearby, said the whole building shook.
"I saw the plane going down," he added. "I heard a huge bang and the glass was shaking and the doors were banging, the whole building was shaking."
Visitors to the site were kept at the airfield until around 7:00pm (1800 GMT). The second day of the airshow on Sunday has been cancelled.
Pictures from the scene showed police had cordoned off the four-lane dual carriageway road, with ambulances and fire crews and emergency service helicopters in attendance. Debris was visible across the road.
Tim Loughton, the area's representative in parliament, drove past the airshow entrance a few minutes before the crash.
"There was about a couple of hundred yards (metres) of cars queueing at the entrance to get in as well as stewards and some spectators sitting by the roadside," he said.
The MP said given the numbers attending the airshow, "thank God that the aircraft did not hit a larger crowd".
"It's horrific. It is a horrendous crash."
Prime Minister David Cameron sent his condolences to the families of those who died.
A Downing Street spokesman said: "The prime minister sends his heartfelt condolences to the families of the people who were so tragically killed after a jet crashed into several vehicles in West Sussex.
"The prime minister's thoughts and prayers are with the families and friends of the victims." -AFP
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