The Indonesian navy is believed to have confirmed the grim discoveries and the bodies are now being taken back to land.
Lt. Tri Wibowo, the Indonesian Air Force pilot who discovered the bodies, tragically revealed: "We thought that the passengers were still alive and waved at us for help.
"But when we approached closer [we saw] they were already dead."
Those searching for the plane, which went missing on Saturday night after failing to get permission to fly higher due to bad weather, discovered a shadow on the seabed west of Indonesia – believed to be the aircraft.
Shortly after the aircraft's disappearance, it was confirmed there were 162 people on board, including a British businessman and his young daughter.
Following the discovery of the bodies, AirAsia CEO Tony Fernandes tweeted: "My heart is filled with sadness for all the families involved in QZ 8501.
"On behalf of AirAsia my condolences to all. Words cannot express how sorry I am."
Sadly families of those on board, waiting at a crisis centre in Surabaya, witnessed the footage of the bodies being rescued.
After seeing the news, one man allegedly collapsed and required medical treatment.