"According to our update, there are 58 bodies and 122 wounded. Forty of them are in critical condition," said Anwar Kazmi, an official with the Edhi ambulance service.
Mohammad Amin Khan, a senior railway official, said: "We are removing wreckage, injured people and dead bodies are still trapped."
Kamal Hyder, Al Jazeera's correspondent in Islamabad, said the immediate rescue operation was hampered because of darkness and fog in the area.
He said the number of dead was likely to rise as many of those injured are in a serious condition.
Asad Saeed, another railway official, said: "It appears to be an accident but we have ordered an investigation to ascertain the cause.
"Initial reports said a welded joint on the track broke, due to contraction in the extreme cold. It sometimes happens in winter."
Hours after the accident, rescuers were still frantically trying to cut into one of the carriages. Another was flattened underneath it, with an unknown number of people feared dead inside.
Army troops were working along with rescuers as the search for more bodies or any other survivors continued nearly 12 hours after the accident.
The carriages fell from an elevated part of the track about four metres above the ground, and piled atop each other in a twisted jumble of metal.
"We were almost asleep when we heard something - a big bang. Then I felt I was flying through the air and the carriage was tumbling to the ground," said Shahid Khan, a 24-year-old salesman.
"We were grappling in the darkness," a shaken Khan said.
"Somehow we managed to make it out."
The Karachi Express was en route to Lahore, filled with hundreds of people getting ready to celebrate the Muslim holiday of Eid al-Adha.
Struggle to cope
Officials said doctors and aid workers were struggling to cope with the large numbers of casualties.
Local people came by the hundreds to help, carrying the injured away on rickshaws, motor-scooters and donkey carts.
Hundreds of people have been killed in recent years on Pakistan's ageing railway system.
Casualty figures are often high because carriages are packed with many more people than they are designed for.
Pakistan suffered its worst train disaster in more than a decade in 2005 when three trains ploughed into each other in Sindh, killing around 150 people.
More than 350 people were killed in a 1990 train accident.