The balloon was flying at 1,000 ft (300m) when it caught fire and exploded, plunging onto fields west of Luxor, officials said.
Two people, including the balloon's pilot, reportedly survived the crash.
Luxor lies on the banks of the River Nile and is home to some of Egypt's most famous pharaonic-era ruins.
Hot air ballooning at dawn is a popular way for tourists to see Luxor's famous sites, such as Karnak temple and the royal tombs in the Valley of the Kings.
Previous crashes US photographer Christopher Michel was in another balloon, taking some aerial shots, at the time.
"We flew over the ancient ruins. Just before landing in the cornfields, I heard an explosion and saw smoke. I think it was the balloon behind mine," he told the BBC.
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Luxor
- Site of ancient city of Thebes
- Temples of Karnak and Luxor in city itself
- Royal tombs in Valley of the Kings and Queens lie across River Nile
- Dawn hot air balloon rides popular way to see sites
- Luxor has seen a drop in visitor numbers since the 2011 uprising
"I wasn't sure what had happened at first. It was only when we landed we heard the full extent of what happened."
Ahmed Aboud, a representative of balloon firms in Luxor, told
Reuters news agency: "There were 20 passengers aboard. An explosion
happened and 19 passengers died. One tourist and the pilot survived." The British foreign office told the BBC it was making urgent inquiries with its colleagues in Egypt to confirm reports of British casualties.
NBC News quoted a Luxor health official as saying that the victims include nine from Hong Kong, four from Japan, two from the United Kingdom and two from France, with two yet to be identified.
Hot air balloon crashes have happened in Luxor before. Two British women were among 16 injured when their balloon came down in April 2009.
Luxor, like many other parts of Egypt, has seen a sharp downturn in visitor numbers since the uprising in early 2011 that forced long-time President Hosni Mubarak to step down.
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