The strong quake hit at 4:30 pm Beijing time (0830 GMT) at a depth of 12 kms with the epicentre in Longtoushan township, 23 kms southwest of the county seat of Ludian, Zhaotong City.
"At least 367 people have been killed and 1,881 people were injured," the official news agency Xinhua reported late night.
The massive quake that left a trail of destruction with more than 12,000 houses toppled and 30,000 damaged, the state-run Xinhua news agency reported.
More than 1,300 injured in Ludian County alone, according to the local government. Transportation, electricity and telecommunications have been cut off in the county. Several people were still missing and the death toll was likely to go up with rescuers frantically scouring the rubble.
Ma Hao, a college student who is volunteering for the rescue at Longtoushan Township, told Xinhua that he saw bodies buried in ruins and helped to carry more than 40 injured people out of the collapsed buildings.
"Honestly, it's such a shame that we had no time to take care of the bodies. We need to help those alive first," he said.
"I felt a strong jolt on my fifth-floor home and some small objects in my home fell off the shelves," said a resident in the county seat of Ludian.
Most people rushed out of buildings to the streets.
Electricity was cut, telecommunications services were affected and it was hard to reach people in Ludian by mobile phone, the resident said.
Another resident said it felt like "sailing a boat" when he was driving a car in the tremor.
Ma Liya, a resident in the county seat, told Xinhua via telephone that the streets were like a "battlefield after bombardment".
She added that the house of her neighbour, a new two-storey building, was toppled.
"It's so terrible. The aftermath is much much worse than what happened after the quake two years ago. I have never felt so strong tremors before. What I can see are all ruins," she said.
More than 2,500 officers and soldiers have been dispatched to join the disaster relief operation.