The flight, operating on the Calcutta-Imphal route, crashed into Thangjing hills, about 37 kilometres (23 mi) south-west of the Imphal airport. The aircraft had started the short flight from Calcutta around 12:00 pm and it began a descent into Imphal airport at around 12:41 pm. Visibility at that time was 7 kilometres (4.3 mi). Imphal airport lost contact with the aircraft just after 12:45, at 1,500 metres (4,900 ft) altitude on the Instrument Landing System. The search and rescue efforts were hampered by bad weather conditions and a hilly and slushy terrain.

The probable cause of the crash was attributed to an "error on the part of the Pilot-in-Command in not adhering to the operational flight plan and ILS let down chart and not realizing that his early descent to 10,000 feet (3,000 m) and turning right for outbound leg without reporting overhead VOR would result in loss of time reference and as such misplace him in the hilly terrain. The Pilot-in-Command's action may have been influenced by his extreme familiarity with the terrain".

Indian Airlines paid compensation to the families of the deceased at the rate of 500,000 Indian Rupees (roughly US$17,000 during the 1991 India economic crisis) for each adult passenger and 250,000 for the one infant passenger.