Flight QZ8501 lost contact with air traffic control at around 06:20 local time (23:20 GMT) over the Java Sea.
The plane, an Airbus A320-200, disappeared midway into the flight of more than two hours from the city of Surabaya. No distress call was made.
Bad weather was reported in the area. A search operation has been suspended for the night.
Planes from Indonesia and Singapore had been scouring an area of sea between Kalimantan and Java.
The flight left the Indonesian city of Surabaya in eastern Java at 05:20 local time (22:20 GMT) and was due to arrive in Singapore at 08:30 (00:30 GMT).
The missing jet had requested a "deviation" from the flight path due to storm clouds, AirAsia said.
Indonesia's transport ministry said the pilot had asked permission to climb to 38,000 ft (11,000m) to avoid thick cloud.
No wreckage has been found, an Indonesian official told the BBC.
AirAsia, a budget airline which owns 49% of AirAsia Indonesia, is based in Malaysia and has never lost a plane.
However, 2014 has been a difficult year for aviation in Asia: Malaysia's national carrier Malaysia Airlines has suffered two losses - flights MH370 and MH17.
Flight MH370 disappeared on a flight from Kuala Lumpur to Beijing in March with 239 passengers and crew. The wreckage, thought to be in southern Indian Ocean, has still not been located.
MH17 was shot down over Ukraine in July, killing all 298 on board.
