Another 24 people were reported to be seriously injured, in the accident on a railway crossing between Millas and Saint-Féliu-d'Amont.
The students on the bus are reported to be between the ages of 13 and 17.
Pictures from the scene showed the school bus sheared in two by the force of the crash.
Around 70 emergency workers and four helicopters were deployed as part of the rescue effort.
The crash happened on a section of line between Perpignan and Villefranche-de-Conflent, the local news website l'Indépendant reports.
A witness who was on the train, named as Barbara, said "it was a very violent crash - it seemed as if the train would derail".
Casualties were being taken to hospital in Perpignan. Rail travel is severely disrupted.
Officials say the bus was taking people home from a secondary school when it collided with the train, which was travelling at 80km/h (50mph).
Weather conditions were reported to be good.
Carole Delga, president of the Occitanie regional council, said the level crossing appeared to be in very good condition and had been upgraded recently. "The level crossing was very visible", she said.
Rail operator SNCF has modernised level crossings across France in recent years following numerous accidents.
Transport Minister Elisabeth Borne called the crash a "terrible accident" and said on Twitter that she was going to the scene, about 850km (530 miles) south of Paris.
Prime Minister Edouard Philippe has arrived at the site and is speaking with families.
Education Minister Jean-Michel Blanquer will visit a counselling centre that has been set up at the Christian Bourquin College in Millas on Friday.
A statement from his office said he would visit "to support students, families, teachers and the entire educational community".
In a tweet, French President Emmanuel Macron said: "All my thoughts for the victims of this terrible accident involving a school bus, as well as their families. The state is fully mobilised to help them."
Photo copyright: FRANCE BLEU ROUSSILLON/HANDOUT. Caption: Pictures from the scene showed the school bus sheared in two