Handler Ryan Almeter, 34, was holding onto the basket to allow passengers to get off when wind caused the balloon to take flight on Friday night, state police said.
The balloon had climbed to about 100ft when Mr Almeter let go of the basket and fell to his death.
The balloon was part of a festival called Balloons Over Letchworth in Livingston County, about 50 miles south of Rochester.
Festival organisers said weather conditions would not allow the festival to continue over the weekend
State police say the US Federal Aviation Administration and the National Transportation Safety Board have been contacted about the accident.
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