The victim, who was taking part in a joint Australia-United States military exercise at the time, was rushed to hospital with burns to his head, face, arms, chest and airways after the incident at Rockhampton airport.
"There was some sort of explosion in a portaloo. It's believed the man was lighting a cigarette at the time," a Department of Community Safety spokeswoman said.
The Australian Defense Force confirmed the explosion happened during the Talisman Sabre joint military exercises, and said the injured man belonged to the Royal Australian Air Force.
"The Royal Australian Air Force member received immediate first aid from his colleagues and he was taken to the Rockhampton Base Hospital with severe burns," said spokesman Brigadier Bob Brown.