The Mexican Navy said the train, which derailed near the town of Nizanda, was carrying nine crew members and 241 passengers, Reuters reported.
Of those on board, 139 were reported to be out of danger, while 98 were injured, including 36 who were receiving medical assistance.
President Claudia Sheinbaum said on X that five of the injured were in critical condition, adding that senior officials had been dispatched to the site to assist the families of those killed.
The governor of Oaxaca, Salomon Jara Cruz, expressed condolences to the families of those killed in the accident and said state authorities were coordinating with federal agencies to assist those affected.
Mexico's Attorney General's Office has already opened an investigation into the incident, Attorney General Ernestina Godoy Ramos said in a social media post.
The Interoceanic Train, inaugurated in 2023 under former President Andres Manuel Lopez Obrador, forms part of the broader Interoceanic Corridor project.
The initiative was designed to modernize the rail link across the Isthmus of Tehuantepec, connecting Mexico's Pacific port of Salina Cruz with Coatzacoalcos on the Gulf Coast.
The Mexican government has sought to develop the isthmus into a strategic trade corridor, expanding ports, railways and industrial infrastructure with the goal of creating a route that could compete with the Panama Canal.
The train service is also part of a broader push to expand passenger and freight rail in southern Mexico and stimulate economic development in the region.