Federal troops were used to quell the violence as rampaging mobs burned the homes of hundreds of settlers from the neighbouring state of Bihar.
Four women and two children belonging to a family of a Hindi-speaking trader from Bihar were hacked to death and their home set alight in the town of Dibrugarh, about 250km from state capital Guwahati.
"You can say many parts of Assam are on fire," said a senior police officer who declined to be identified.
Thousands of people sought shelter in police stations across Assam, which is also torn by a 25-year-old insurgency.
Several local organisations, among them a key separatist guerrilla group, gave migrants from Bihar a deadline of seven days to leave Assam, as a dispute triggered when competition for jobs flared into violence.
"All Biharis in Assam should immediately move out or face bullets"
"All Biharis staying in the state should immediately move out of Assam, or face bullets," said Paresh Barua, commander-in-chief of the United Liberation Front of Asom (ULFA). The ULFA is fighting for an independent nation of Assam for an estimated 26 million people.
The trouble in the state began after Assamese train travellers were attacked in Bihar last week, following reports early this month of assaults on some Bihari students who came to Assam to do tests for railway jobs.
Assamese students feared Biharis might corner the railway jobs that were available.
Tensions have simmered for years between the two groups, with rebels accusing the Hindi-speakers of north India of moving into the area and taking away jobs.
In 2000, the ULFA group killed up to 150 Hindi-speaking people in a series of attacks.
To calm tensions on Tuesday, army columns staged marches through several districts.
Meanwhile, tensions were also on the rise in neighbouring Nagaland state with an outlawed rebel group, the Naga National Council (NNC), asking Bihari people to leave the region immediately.