A photo of the wreckage taken by Italy's fire service showed the crushed remains of the cable car in a clearing among a thick patch of pine trees near the summit of the Mottarone peak overlooking Lake Maggiore.
At that location, the cables of the ski lift were particularly high off the ground, said Walter Milan, spokesman for the Alpine rescue service. The cause has not been determined.
He said the cable line was renovated in 2016 and had only recently reopened after coronavirus lockdowns forced the closures of ski lifts across Italy.
Sunday was a beautiful, sunny day in the area, and Mr Milan said that many families were taking advantage of the weather to enjoy a day out after months of lockdown.
Italy only reopened a few weeks ago, allowing travel between regions after a winter of Covid-19 restrictions.
Mottarone reaches a height of 1,491m (4,900ft) and overlooks the picturesque lake and the surrounding Alps of Italy's Piedmont region.
Italian Prime Minister Mario Draghi described the crash as a "tragic accident" and said he was receiving updates from the minister of infrastructure and transport, as well as local officials.
"I express the condolences of the whole Government to the families of the victims, with a special thought for the seriously injured children and their families," he said in a statement.