The daredevil was planning to drive a motorcycle off a pier in Geelong, Victoria and then board the aircraft but he was left stunned when it nosedived into the sea in front of his eyes.
Two passengers and the plane's pilot were pulled from the ocean by the crew of a passing boat and taken to hospital.
Margera had initially feared members of his film crew were on board the plane when he saw it crash, telling reporters, "We saw the plane crash and we saw the plane upside down. For 10 long minutes we thought it was them.''
He later expressed his shock in a post on his Twitter.com page, writing, "Just about to drive a motorbike off a pier & get on a seaplane (as part of a stunt) but the plane just crashed. Jesus Christ."
The three crash victims are in a stable condition at Geelong Hospital, according to local authorities.