Air France said the plane, which reported an electrical fault at 02:14 GMT, could have been hit by lightning.
Pierre-Henri Gourgeon, the airline's chief executive, said: "We are probably facing an air catastrophe".
Jean-Louis Borloo, France's environment minister, said the plane would have certainly run out of fuel by now, adding "we must now envisage the most tragic scenario".
Air France said it had received the message from the plane reporting an electrical short-circuit after it had flown through an area with strong turbulence.
It said the Airbus A-330 plane had "crossed through a thunderous zone with strong turbulence'' at around 02:00 GMT.
The company said the passengers included one infant, seven children, 82 women and 126 men. The plane was also carrying 12 crew members.
There are reports that in addition to French and Brazilian passengers on board the plane there were some Italians and Britons.
John Guntrip, a former crash investigator, said the plane's disappearance indicated a "catastrophic failure".
"The fact that the Brazilian authorities have released air search and rescue units ... would seem to indicate it has gone down fairly early on in the flight from Brazil," he told Al Jazeera.
"It would a be a catastrophic failure because there would be various automatic devices that would be activated by the crew that would help to locate the aircraft.
"But the fact that they're searching for it shows that it didn't report its first mid-Atlantic reporting point by radio by satellite phone which means it never got there," he said.
Estelle Youssouffa, Al Jazeera's correspondent in Paris, said authorities at Charles de Gaulle had said that there was "no hope" for the aircraft.
"It seems to have simply vanished from radar screen. President Sarkozy has expressed his great concern and asked his government to put all its efforts into finding the missing plane," she said.
But she added no one had confirmed any plane crash or accident.
Gabriel Elizondo, Al Jazeera's correspondent in Sao Paulo, said the island where the Brazilian air force were searching was around 340km northeast off the coast.
"But it's important to note that this plane has only gone missing at this point," he said.
Authorities have set up a crisis centre at Charles de Gaulle airport and Dominique de Bussereau, the French junior transport minister, is on his way to the scene.
The Airbus A-330 family of aircraft has a good safety record.
Its first, and last crash, was on 30 June 1994 when an A-330 crashed on a test flight shortly after take-off from Toulouse in France, killing all seven on board.
In a statement, Airbus said the plane had been delivered to Air France from the production line in April 2005.
The company said the the aircraft, which was powered by CF6-80E1 engines, had accumulated approximately 18,800 flight hours in some 2,500 flights.