Initial reports indicated two people were aboard the World War II-era plane when it went down, but their conditions weren't immediately known, authorities said.
Emergency crews from several agencies went to the scene to search for the aircraft and a perimeter was set up around the area.
Les Galuner, a tourist from Philadelphia vacationing in Destin, saw what he said appeared to be a yellow World War II-era training plane crash into the Gulf.
Galuner said the plane dipped low several times before making a final attempt to gain altitude and then plunging into the water.
"It hit hard; we saw the splash," he said.
Galuner said he twice spotted what looked like flames coming from the aircraft on the water's surface after it crashed, each time lasting for about a minute.
People were still swimming and surfing in the ocean as a Coast Guard vessel made its way to the wreckage.
******UPDATE at 8:30 p.m.******
The Okaloosa And Walton County Sheriff's Offices report that the wreckage of a small plane reported to have gone down in the Gulf of Mexico around 12:20 Friday has been located by the Okaloosa Sheriff's Office and Florida Fish and Wildlife Commission as of 3:20 p.m.
The plane is resting on the sea bottom about three-quarters of a mile off the coast of the Okaloosa/Walton County line. Divers will attempt to reach the wreckage. It is unknown how many people were on board or what caused the crash.
The FAA and National Transportation Safety Board have been notified and will be conducting any investigation.
More details will be released as they become available
By PDGOO goopaydayloans