Scotland's Grampian Police said eight bodies have been recovered from the sea and the search for eight other people continues.
A spokesman for BP oil company said the helicopter was working for the oil company and was returning to Britain from an offshore oil field.
Jake Molloy, spokesman for the oil workers union Oilc, said the helicopter was a Bond Super Puma Flight 85 N, which had been due to arrive at Aberdeen Heliport at 2:15 p.m. local time (1315GMT).
The Maritime and Coastguard Agency said two Royal Air Force helicopters and a Nimrod airplane went to the area, along with ships in the vicinity.
Local hospitals in nearby Aberdeen, about 535 miles north of London, put their major incident plan into place to deal with the accident.
Jim Ferguson, an aircraft expert based in Aberdeen, said the journeys are made in dangerous conditions but the safety record is good.
Wednesday's crash was the second such incident in the North Sea this year, and both incidents involved the same Super Puma model of helicopter. In the earlier crash, last February, everyone was rescued.
In Canada, 17 people died March 12 when a Sikorsky S-92A helicopter ditched in the Atlantic after declaring a mechanical problem. The chopper was carrying workers to two offshore oil platforms when it crashed.
Helicopters have been used to ferry workers to and from the oil and gas fields off the Scottish coast since the construction of platforms there in the 1970s.
The worst crash in North Sea was in 1986 when 45 people died after a Chinook crashed into the sea off the Shetland Islands north of Scotland.
Safety was improved after the Chinook crash and all offshore workers in the North Sea now have to complete tough training in a crash simulator. All wear survival immersion suits and are equipped with personal beacons and floatation devices.
The Super Puma is fitted with an airbag similar to a car airbag, which deploys on contact with the water.
Prime Minister Gordon Brown said his thoughts were with the families of those involved.
"It's at times like this we remember the risks and dangers people have to undergo working to meet our energy needs," he told reporters.