The accident occurred by the resort town of Stresa, which lies on the shores of Lake Maggiore in the Piedmont region.
The 20-minute cable car ride, popular with tourists, links Stresa with the 1,500-metre (4,900-foot) summit of the Mottarone mountain, and offers spectacular views of the Alps.
An emergency services spokesman said nine people were killed and two children aged nine and five injured and taken by helicopter to a pediatric hospital in the city of Turin.
The ministry of infrastructure said in a statement that the accident occurred around 12:30 pm (1030 GMT) as the cabin was about 100 metres from the summit.
Fire service images show debris from the white and red cabin in a steep wooded area where access appeared difficult. The cable car system was closed between 2014 and 2016 for maintenance work.