Dozens more are believed to be injured but local media has claimed emergency services are struggling to the trapped passengers.
A Mada spokesman confirmed two men, aged 23 and 37, have been killed in the fatal incident.
The bus landed on its roof in Shomron, a region in the northern West Bank.
Some people are still believed to be trapped in the upturned bus as rescue crews struggle to reach the survivors.
Menachem Leff, head of the Binyamin region of United Hatzalah group of volunteer medics, said: “This is a very difficult situation in which one bus has fallen off of a cliff and dropped some 400 meters into the wadi [valley] below.
Emergency services search the scene for any survivors falling the 200ft cliff drop
Ezekiel Klein, a student in Israel, told Express.co.uk the bus which crashed was the last of the night on the 461 route from Jerusalem to the Ariel settlement.
There are believed to have been around 20 people on board, with 16 reported injured after the vehicle fell off a cliff near the Ma’ale Levona settlement.
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Rescuers struggled to reach the overturned bus
“United Hatzalah first responders who arrived at the scene have requested that lighting be brought, as well as search and rescue crews, fire rescue crews and helicopters be dispatched in order to help reach those on the bus.
“Due to the extreme nature of the incident, volunteers have also been dispatched from the Jerusalem and Shomron chapters of United Hatzalah.”