Crash specialist Larry Vance made the extraordinary claim after hitting out at investigators for not taking him seriously.
Mr Vance, who wrote a book called MH370: Mystery Solved, told the Daily Star: “The passengers ended up in the Southern Indian Ocean, and are at the bottom of the sea inside the sunken and intact fuselage.”
The expert said he has evidence about where the Boeing 777 went down, but added this is yet to be taken seriously.
He said: “I honestly believed that once the official investigation team saw the physical evidence that we discovered, and how we interpreted it accurately, they would change their minds about what they thought happened to MH370.
“Unfortunately, and disappointingly, I was wrong.”
Mr Vance says he penned his book in an attempt to give a “professional account” of what happened, and said it was his “duty” to do so.
The disappearance of flight MH370 has prompted a range of theories after it vanished on route to Beijing from Kuala Lumpur in March 2014 with 227 passengers and 12 crew members onboard.
A popular theme for the theories is a government cover-up, with many suggesting the only explanation is that the CIA, Russians, Chinese or Malaysians are responsible for the real reason for the flight’s disappearance.
Malaysia’s current prime minister, Mahathir Mohamad has corroborated this theory, suggesting American secret agents know where the plane is located.
He said in 2014: “Someone is hiding something.”
Another theory is a battery explosion or a mechanical failure.
There were more than two tonnes of lithium-ion batteries in the cargo hold, alongside more than four tonnes of mangosteen fruit.
Some feared juice from the fruit had leaked and came into contact with the batteries, triggering an explosion.
One widely circulated theory is the air pressure in the cabin depressurised and life-saving oxygen masks did not work.
At an altitude of 35,000ft, those on board would have had just 30 and 60 seconds before falling unconscious.
This theory could explain why no distress calls were made from the cockpit or the passengers.
The pilot of MH370 was the last voice to be heard before the plane vanished, leaving some to believe the blame lay with him.
Captain Zaharie Ahmad Shah bid farewell to Kuala Lumpur air control saying: “Goodnight, Malaysian three seven zero.”
Two minutes later, the planes tracking system was shut down and some have associated his goodbye with the disappearance.
This theory has been denied by investigators.