Benedicto Giron, spokesman for the government's civil protection agency, said on Thursday the deaths occurred at Santiago Atitlan, a lakeside town in the Mayan highlands popular with US and European visitors.
"We can confirm the 40 dead at Santiago Atitlan," he told the Sonoro radio station.
He did not say how many people were missing but other rescue workers told Guatemalan radio that as many as 800 people might be unaccounted for.
The flooding came from storms sparked by Hurricane Stan, which smashed into Mexico from the Atlantic earlier this week.
With the new deaths, 210 people have now been killed in floods and mudslides in Central America and southern Mexico in the past few days in the wake of Stan.
Hurricane Stan has triggered
floods and mudslides
Stan quickly weakened but several days of rains swelled normally slow rivers into thundering, brown torrents that swept away bridges, houses, roads and trees across the region.
Dozens of fishing villages on Guatemala's Pacific coast were cut off by flooding, and another potentially deadly mudslide was reported on Thursday at the Tacamulco volcano near the Mexico border.