Quebec provincial police Lt. Michel Brunet said Sunday that 40 people are missing.
Fires were preventing rescuers from reaching part of the 73-car train, and billowing black smoke could still be seen long after the derailment.
The multiple blasts came over a span of several hours in the town of 6,000, which is about 155 miles (250 kilometers) east of Montreal and about 10 miles (16 kilometers) west of the Maine border. About 30 buildings were destroyed after tanker cars laden with oil caught fire in the picturesque lakeside town in Quebec's Eastern Townships.
The derailment caused several tanker rail cars to explode in the downtown district, a popular area packed with bars that often bustles on summer weekend nights. Police said the first explosion tore through the town shortly after 1 a.m. local time. The fire then spread to several homes.
The cause of the accident was believed to be a runaway train, the railway's operator said. The president and CEO of Rail World Inc., the parent company of Montreal, Maine & Atlantic Railway, said the train had been parked uphill of Lac-Megantic. The tanker cars then sped downhill into the town before derailing.