The incident was caused by strong winds which forced the balloon off course, according to Egyptian officials.
The balloon had been carrying a group of around 20 foreign tourists on a sightseeing tour above Luxor, renowned for its pharaonic temples and tombs.
Luxor governor Mahmoud Badr confirmed the accident, telling AFP he was at a hospital in the city checking on passengers taken there.
There are no official details about the nationalities of the victims but local media is reporting the person killed was a US citizen.
This is not the first fatal hot air balloon crash over Luxor – in 2013, 19 foreign tourists were killed when their balloon caught fire following a reported gas leak.
And in 2016, Egypt briefly halted hot air balloon excursions after 22 Chinese tourists suffered minor injuries in a crash landing.
More to follow…