Distraught family members rushed to the scene of the crash, searching for signs of their loved ones along the tracks.
The bus was carrying more than 50 children ages 4 to 6 when it was struck near al-Mandara village in Manfaloot district in the province of Assiut, a security official said.
Investigators say it appears that the railroad crossing was not closed as the train sped toward it.
Hospital officials said between seven and 11 wounded were being treated in two different facilities, many with severed limbs.
Egypt's railway system has a poor safety record, mostly blamed on badly maintained equipment.
This is the worst such tragedy since the country's first freely elected president, Mohammed Morsi, took office this summer. The state news agency reported that Egypt's Transport Minister Mohammed el-Meteeni resigned in the wake of the crash.
The Associated Press contributed to this report.