Aberdeen Coastguard confirmed that the helicopter had gone down 14 miles west of Fair Isle, between Orkney and Shetland.
Lifeboats from Lerwick, Kirkwall, and Aith were sent to the scene. Three helicopters are also involved in the search which is being co-ordinated by Shetland Coastguard.
Other vessels are on the scene to help the stricken helicopter, which went down in a controlled ditching in the sea.
Aberdeen Coastguard said all 19 passengers and crew had been accounted for.
There were no injuries in the ditching and all 19 people on board are being taken by helicopter to Kirkwall in Orkney, the coastguard said.
It is understood the helicopter was flying from Aberdeen to the West Phoenix drilling rig, about 86 miles (140km) north-west of Shetland.
A spokesman for the coastguard said the weather in the area was good. "It has been quite calm today and that has been favourable in terms of getting the rescue crews to the scene quickly."
The aircraft involved in the accident was thought to be one of the fleet used by CHC (Canadian Holding Company) to ferry offshore workers to North Sea rigs.
The Eurocopter AS332 is also known as the Puma. CHC has 36 in its international fleet, operating in the UK, Australia, Brazil, Canada, and Norway.
CHC said in a statement: "We can confirm that there has been an incident involving one of our aircraft in the North Sea, approximately 32 miles south-west of Shetland.
"The appropriate authorities have been informed and the company’s Incident Management Team has been mobilised."
A Scottish Government spokesman said: "We are aware that a helicopter has ditched in the North Sea, south of Sumburgh. And we understand that all 19 people on board are now safe and well following the dispatch of emergency services to the site.
"Scottish ministers are being kept updated on the situation and we will release further information when it becomes known."
In May, all 14 passengers and crew members on a Super Puma helicopter were rescued after it ditched about 30 miles off the coast of Aberdeen. The helicopter was on a scheduled flight from Aberdeen Airport to a platform in the North Sea at the time.
A year earlier 16 people died when a Super Puma plunged into the sea. Its gearbox failed while carrying the men to Aberdeen. The Bond-operated aircraft was returning from the BP Miller platform when it went down off the Aberdeenshire coast on April 1, 2009.
That incident happened about six weeks after a Bond Super Puma with 18 people on board ditched in the North Sea as it approached a production platform owned by BP. Everyone survived that accident.
CHC Helicopter was created in 1987 after businessman Craig Dobbins purchased Okanagan Helicopters and Toronto Helicopters and merged them with his own company, Sealand Helicopters.
The company also bought shares in British International Helicopters in 1994, turning the company into its UK subsidiary.
CHC currently employs more than 4,300 people in 30 countries.
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