The service members went missing after what the Marine Corps is calling a "mishap" with an MV-22 aircraft, also known as an Osprey heli-plane.
The tilt-rotor MV-22 Osprey has a reputation within the us military as being a particularly accident-prone aircraft.
This is a breaking story.
The Osprey aircraft were in Australia for Operation Talisman Sabre, which saw defence forces from the United States and Australia conduct training exercises off the Queensland Coast.
According to The Sunday Mail, a source said that one seriously injured Marine was being transported to Rockhampton Hospital.
Twenty-three of the 26 personnel on board have been rescued, the US Marine Corps said.
She added that she had briefed Prime Minister Malcolm Turnbull and had spoken with the United States defense secretary, Jim Mattis, "to offer Australia's support in any way that can be of assistance".
Australian authorities said no Australian personnel were on board.
The ship's small boats and aircraft immediately responded in the search and rescue efforts.
Marine authorities are investigating the incident.
"Our thoughts are with the crew and the families affected". Last month, a cargo plane carrying 15 Marines and one sailor crashed in western MS, killing all aboard.
The aircraft has been involved in a series of high-profile crashes in recent years.
Recall that the tiltrotor MV-22 Osprey is a hybrid aircraft and helicopter, which is capable of vertical takeoff.
The aircraft, resembling a cross between a helicopter and airplane, has capabilities including taking off vertically and travelling much faster than a helicopter.
Since 1991, there have been 9 fatal crashes involving V-22 Ospreys.