The raging waters destroyed hundreds of houses and swamped hectares of vital agricultural lands in Khwaja Omari district, 150km south of the capital Kabul, said an Afghan official.
There was no information on casualties as all roads to the affected area of Ghazni province were blocked after the Bandi Sultan dam ruptured, provincial governor Asadullah Khalid said.
Heavy floods had also reached the provincial capital of Ghazni city, destroying hundreds of shops and houses, the governor added.
US-led forces stationed in Afghanistan said they had sent military helicopters to help with rescue operations.
"A dam did burst in Ghazni; we sent four Black Hawk helicopters," Lieutenant Cindy Moore, a spokeswoman for the US forces in Afghanistan, said.
She also had no information on any potential casualties.
Flooding caused by melting snow and torrential rains has already left about 200 Afghans dead in recent weeks.