The Boeing 737 passenger jet is said to have had 149 passengers with eight crew on board.
The airline, in a statement, said the plane left Addis Ababa before the accident at Bishoftu.
"The aircraft B-737-800MAX with registration number ET-AVJ, took off at 8.38am local time from Addis Ababa, Bole International Airport, and lost contact at 8.44am," the airline said in a statement.
“At this time, search and rescue operations are in progress and we have no confirmed information about survivors or any possible casualties.”
Ethiopian Prime Minister Abiy Ahmed has sent his condolences to the families.
On his Twitter page, he said, “The Office of the PM, on behalf of the Government and people of Ethiopia, would like to express it’s deepest condolences to the families of those that have lost their loved ones on Ethiopian Airlines Boeing 737 on regular scheduled flight to Nairobi, Kenya this morning”.