Farmer Domingo Sanchez, 21, said: “There was a roar … We didn’t know what was happening, and then we went outside, and there were cracks opening the earth.”
His cousin, David Sanchez, said two waves had hit the town.
He said the first was “an irresistible” wave caused by the landslide pushing water downstream after it hit the river.
A second wave struck after water that had been dammed by the mud broke through.
“It swept away everything, trees, houses, everything,” he said.
Most of the community of 500 people had fled into hills before the landslide struck.
Al Jazeera correspondent Mike Kirsch said: “V
illagers who had been evacuated … say as many as 20 homes in one village were completely destroyed when the landslide slid over the top of them.
“As many as eight people are dead and possibly many more.”
At least 30 people have been rescued and rescue workers are continuing to search for survivors.
“We have about 70 people from the village in shelters and about 14 to 16 people missing, but the area is so remote and communication links are down so our search is slow,” rescue worker Alejandro Cabrera said.
Officials said the mudslide has caused a natural dam that could collapse and send more water into the area.
San Juan Grijalva is close to Tobasco state on Mexico’s southern Gulf coast where about 80 per cent of the region is underwater after rain last week caused rivers to burst their banks and left 800,000 people homeless.
Food and water shortages have occurred in some areas of Tobasco in the past two days.
People have begun drinking water from muddy rivers and cisterns in Villahermosa, Tobascos’ capital, residents said.
Government officials said Villahermosa’s evacuated residents would not be able to return for months.
“We’re calculating the problem as one of three months … before 100 percent of the people can go home,” Tabasco state governor Andres Granier said.
President Felipe Calderon has canceled a trip to a three-day Ibero-American summit starting in the Chilean capital Santiago on Thursday.