The three skydivers, believed to be in their 30s and 40s collided mid air and their parachutes failed to open.
"Skydiving operations have been suspended at Mission Beach while the appropriate authorities conduct an extensive investigation".
Vision captured shortly before the fatalities has emerged of other tourists successfully completing their jumps at the beach.
A witness said: 'You could see one chute was tangled and it wasn't opening.
Skydiving is a popular tourist activity in the area, with numerous backpackers who travel the Queensland coast stopping by Mission Beach. The other two were jumping as a tandem pair: "a highly experienced instructor and a customer", the statement from Skydive Australia reads.
"I was just watching him in free fall until he went behind the trees, and that was the last I saw", he said. I had my heart in my mouth'.
The company operating the dives, Skydive Australia, released a statement on Friday offering its "deepest sympathies and heartfelt condolences" to the families of the deceased and to the local skydiving community.
Residents of Mission Beach are said to be devastated by the accident.
According to the ABC, the three people landed on the lawn of a property in Alexander Drive, Mission Beach, which is a small coastal town about two hours' drive south of Cairns.
Police will compile a report for the coroner with the investigation to be assisted by CASA and the Australian Parachute Federation.
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