According to the New York Times, Falcon 1 Flight 3 failed to reach orbit. Reports say that around two minutes into the flight the rocket was seen to be oscillating before the live signal from an on-board camera went dead and the rocket was lost.

Mission Manager Max Vozoff and launch commentator said, "We are hearing from the launch control center that there has been an anomaly on that vehicle." SpaceX's Elon Musk wrote in a blog post on Saturday at the SpaceX website, "It was obviously a big disappointment not to reach orbit on this flight [Falcon 1, Flight 3].  On the plus side, the flight of our first stage, with the new Merlin 1C engine that will be used in Falcon 9, was picture perfect.  Unfortunately, a problem occurred with stage separation, causing the stages to be held together.  This is under investigation and I will send out a note as soon as we understand exactly what happened."

Musk continued writing, "The most important message I’d like to send right now is that SpaceX will not skip a beat in execution going forward.  We have flight four of Falcon 1 almost ready for flight and flight five right behind that.  I have also given the go ahead to begin fabrication of flight six.  Falcon 9 development will also continue unabated, taking into account the lessons learned with Falcon 1.  We have made great progress this past week with the successful nine engine firing."

Falcon 1 Flight 3 is not the first failure for SpaceX. DailyTech reported in March 2006 that the first Falcon 1 flight failed 20 seconds after liftoff. It was later determined that the failure of the rocket was due to a fuel line leak. In March 2007, DailyTech reported that the second Falcon 1 flight had failed about five minutes into launch.

The payload on Falcon 1 Flight 3 was varied and included the Trailblazer satellite developed for the Jumpstart Program from the Department of Defense's Operationally Responsive Space ORS Office. Two small NASA satellites were also onboard Falcon 1 Flight 3 including PRESat -- a micro laboratory for the Ames Research Center -- and the NanoSail-D -- a test project to study propulsion for space vehicles using an ultra-thin solar sail.

The New York Times reports that the rocket was also carrying the ashes of 208 people who wished to be shot into space. Among the cremated remains were those of astronaut Gordon Cooper and actor James Doohan of Star Trek fame.

SpaceX's Falcon 1 launch facilities are on Omelek Island and part of the Reagan Test Site (RTS) at the United States Army Kwajalein Atoll in the Central Pacific. SpaceX's Falcon 1 rocket was designed from the ground up  in Hawthorne, California and is a two-stage, liquid oxygen and rocket-grade kerosene powered vehicle.

SpaceX says that the first stage of the Falcon 1 is powered by a single SpaceX Merlin 1C Regenerative engine and the engine was flying for the first time aboard Falcon 1 Flight 3. The second stage of Falcon 1 is powered by a SpaceX Kestrel engine.