"This is a huge loss for the Croatian army... I resign," Defence Minister Damir Krsticevic told reporters.
"What is important is that everything be investigated," said Krsticevic, who is also one of the country's deputy prime ministers.
Two crew members were killed when the Czech-made Zlin aircraft crashed around 4:00pm (1400 GMT) near the village of Biljane Donje, the defence ministry said in an earlier statement.
"It was a regular training flight," the statement said without elaborating.
The reasons for the crash were not immediately known.
The minister talked to Prime Minister Andrej Plenkovic over the phone and the two will meet Friday, the government said.
It is the second fatal crash for Croatia's air force this year.
In January, two pilots were killed when a military helicopter crashed off the Adriatic coast.
The US-made Kiowa Warrior OH-58D helicopter was also on a training flight.
The cause of the crash has still not been made public.
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