The L-39ZA jet -- which had been modernised to NATO standards in 2022 -- burst into flames after crashing into a wooded area near the military base.
"Two pilots were killed during training for a demonstration flight," interim Prime Minister Dimitar Glavchev told journalists at the southern Graf Ignatievo air base.
Both men onboard, born in 1973 and 1996, were unable to eject from the aircraft and died in the accident.
Air Force Commander Dimitar Petrov said the two pilots were "among the best" and had repeatedly carried out the same exercises in the past.
Saturday's air show to commemorate the 20th anniversary of Bulgaria's NATO accession was cancelled, with the army declaring a day of mourning.
Bulgaria's outdated air force, most of which was bought during communism, has frequently caused tensions, with pilots lacking crucial training, according to a recent army report.
In June 2021, a Bulgarian pilot died when his MiG-29 aircraft crashed during an exercise in the Black Sea.
Situated on NATO's eastern flank, Bulgaria has ordered 16 US fighter jets in recent years to replace its ageing Soviet MiG-29s, signing the largest army modernisation contract since the end of communism.
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