The blast sent a fireball and black smoke into the air, destroying dozens of buildings in Lac-Megantic, some 155 miles east of Montreal.
The train derailed early on Saturday; emergency services who worked through the night said they could not tell if there were any casualties.
Firefighters from across the border in the US are helping tackle the blaze.
The train had 70 cars filled with petroleum products, some of which exploded, prompting fires in nearby homes.
It is not clear what caused the explosion.
Some of the train’s cargo spilled into the nearby Chaudiere river, said Environment Quebec spokesman Christian Blanchette.
The train was reportedly destined for Maine.
Lac-Megantic, a lakeside town close to the border with Maine and Vermont, is home to some 6,000 people.
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