The packed bodies were loaded into wagons at a station in the town of Torez, some 15 kilometres from the crash site, and the train left for the rebel-held Ukrainian city of Donetsk, Ria Novosti news agency reported.
The smell at the station was unbearable and separatists guarding the grisly cargo had pledged not to move the bodies until "international experts" arrive, Organisation for Security and Cooperation in Europe (OSCE) spokesman Michael Bociurkiw said.
The train, however, left the station and its first destination is the town of Illovaisk, in the Donetsk region, from whence it will go to the region's capital Donetsk.
There are a total of 198 bodies on the train, according to OSCE monitors who inspected the train ahead of the departure. Armed rebels were guarding the train.
OSCE monitors escorted by armed rebels appeared today to have been granted greater freedom to examine the crash site.
The Malaysia Airlines Boeing 777 carrying 298 people was flying from Amsterdam to Kuala Lumpur as it was downed on Thursday between Krasni Luch in Luhansk region and Shakhtarsk in the neighbouring region of Donetsk.
It is believed that flight MH17 crashed after being hit by a surface-to-air missile fired from the rebel-held area. All 298 people on board were killed.
The Ukrainian government and pro-Moscow rebels have been trading blame for the downing of the airliner.
Western countries have criticised the pro-Russian rebels in the area for restricting access to the crash site.
Indiscipline and chaos ruled at the crash site in the last two days.
The US State Department said there had been multiple reports of bodies and aircraft parts being removed, and potential evidence tampered with.
Meanwhile, France warned Russia of "consequences" at the EU if Moscow did not "immediately take the necessary measures", after the leaders of France, Germany and Britain held a conference call.
World leaders have demanded Russian President Vladimir Putin to use his influence to persuade the rebels to hand over the victims and allow international investigators unfettered access to the crash site.
Raising the prospect of fresh EU sanctions against Russia over the downing of the Malaysian jet, British Prime Minister David Cameron, in an article in The Sunday Times, said the West must "fundamentally change our approach" unless Moscow alters course in Ukraine.
"Russia can use this moment to find a path out of this festering, dangerous crisis. I hope it will do so. But if that does not happen then we must respond robustly," Cameron wrote.
Earlier, the Ukrainian State Emergency Service (SES) said 380 staff were taking part in the search that stretches across 34 sq km of eastern Ukraine.
Latest figures released by Malaysia Airlines show the plane was carrying 192 Dutch nationals, 44 Malaysians (including 15 crew), 27 Australians, 12 Indonesians and 10 Britons, four Germans, four Belgians, three from the Philippines, and one each from Canada and New Zealand.
Ukraine yesterday claimed it has "compelling evidence" that Russian crew operated the missile system that downed a Malaysian jet with 298 people on board and accused Moscow of helping rebels in trying to destroy evidence.
As calls for an independent investigation into the downing of the jet grew louder, German Chancellor Angela Merkel and Russian President Putin yesterday agreed for an international probe.
The two leaders, who spoke on the telephone, "agreed that an international, independent commission under the direction of ICAO (UN's International Civil Aviation Organization) should quickly have access to the site of the accident... to shed light on the circumstances of the crash and move the victims," a German government statement said.
Kiev also accused Russia of helping pro-Moscow rebels of trying to destroy evidence in the downing of the aircraft.
It complained that "the terrorists" had taken 38 bodies to a morgue in the rebel-held city of Donetsk. It said the rebels were also trying to transport the plane's wreckage to Russia.
Australian Prime Minister Tony Abbott yesterday said the crash site was "absolutely chaotic" as he feared interference with the evidence. Twenty-eight Australians were on the flight.
Abbott said recovering the bodies was a priority.