The accident occurred 80km east of the Mediterranean city of Marsa Matruh.
A witness said the level crossing was just beyond the top of a hill and therefore not visible to approaching traffic until the last minute.
Heavy equipment was brought to the scene to try to lift the mangled carriages, officials said. Many bodies are thought to be still trapped inside the carriages.
Dozens of emergency vehicles were sent to the scene, including ambulances from the capital Cairo, 400km to the southeast.
The crash is the latest in a series of transport accidents in Egypt, most of which have been blamed on negligence and poor maintenance.
At least 58 people were killed and 144 injured in August 2006, when a passenger train slammed into the back of another on the same track, derailing carriages and setting one train ablaze.
Egypt’s worst rail disaster occurred in February 2002, when a passenger using a stove set ablaze a train heading to the south of the country, killing at least 361 people.
Egyptian roads are among the most dangerous in the world. According to the transport ministry, around 6,000 people die each year in accidents and 30,000 are injured.