The number of deaths is expected to rise as the situation clears.
So far, 17 people have been confirmed dead according to Iranian authorities.
Four of the train's seven carriages derailed about 50 km outside the desert city of Tabas, just over 50 km southeast of the capital Tehran.
The train is believed to have collided with an excavator.
Why one stood by the railway track is still unclear.
Rescue workers have arrived with ambulances and three helicopters, as it is difficult to get to the area.
Traffic in Iran is among the most dangerous in the world.
In 2016, a train accident occurred that killed dozens of people, but the worst accident took place in 2004 when about 320 people were killed and hundreds more were injured when a fuel train crashed.
Every year, about 17,000 people are killed on the highways as well.
Unsafe vehicles, traffic laws that are not complied with and substandard rescue services are seen as the reason for the high accident figures.