Access to the disaster area was difficult as a section of the island's main roadway was buried under tonnes of mud and rock, and rescuers were wary of a second dam nearby that is at bursting point, officials said.
When the Kaloko dam burst in northern Kauai on Tuesday morning, it unleashed more than 1.2 billion litres (317 million gallons) of water into a valley, creating a mudslide that spilled across a road and into Kilauea Bay.
"The last we heard, there's possibly seven people missing, and the Coast Guard has found one body in the ocean," said Ray Lovell, civil defence spokesman.
The mudslide swept away at least two homes in the valley, leaving only their foundations, said Lovell. "There were possibly other buildings like agricultural buildings, but the problem is to get into the area to see," he added.
"The last we heard, there's possibly seven people missing, and the Coast Guard has found one body in the ocean"
Civil defence spokesman
The mudslide has covered several roads, including a 100-metre section of the island's beltway, blocking access to the area.
Rescue crews have delayed digging operations to clear the road as another nearby dam is also in danger of bursting, the spokesman said.
"It cut off people in this area, but they can't repair the road before they ease the pressure on this dam," Lovell said, adding that evacuation centres had been set up in the northern shore of Kauai in case the dam breaks.
Todd Offutt, a Coast Guard Lieutenant Commander, said major rescue operations were being aided by a C-130 cargo airplane and a Dolphin helicopter.
Officials had no immediate explanation for the cause of the rupture, which occurred shortly before 8am (1800 GMT), but the Pacific island has experienced heavy rains in recent weeks.