On August 3, 2001, about 1250 Alaska daylight time, a wheel-equipped Cessna 207 airplane, N9794M, sustained substantial damage during an in-flight collision with terrain, about 15 miles east of Healy, Alaska. The airplane was being operated as a visual flight rules (VFR) on-demand passenger flight under Title 14, CFR Part 135, when the accident occurred. The airplane was registered to Ronald D. Rosso, and operated by Denali Air Taxi, Inc., Denali Park, Alaska. The certificated commercial pilot, and the five passengers aboard, were not injured. Instrument meteorological conditions prevailed in the area of the accident, and VFR company flight following procedures were in effect. The flight originated from the Denali Wilderness Lodge about 1240, en route to the Denali Airstrip. During a telephone conversation with the National Transportation Safety Board investigator-in-charge on August 4, the pilot reported that his airplane was the second airplane in a flight of two airplanes transporting lodge guests to the Denali Airstrip. He stated that shortly after takeoff he lost sight of the first airplane, but maintained radio contact. He added that the standard route to the Denali Airstrip was through mountainous terrain. As the flight progressed, it began to rain, accompanied by worsening visibility and low ceilings. The pilot said that he became disoriented to his exact position, and mistakenly turned into a small valley. He said that once he entered the valley, the terrain began rising, so he initiated a climb. The valley became too narrow to turn around, and the clouds began to close around the airplane as he continued to climb. The terrain continued to rise, and he noticed his airspeed was decreasing. Shortly thereafter, the airplane collided with rising terrain, and sustained substantial damage. The emergency locator transmitter (ELT) activated, and personnel from a local helicopter operator at Denali Park, began a search, and found the airplane wreckage. The pilot stated that there were no preaccident mechanical anomalies with the airplane.