The six-carriage train, carrying around 250 passengers, hit the mudslides as it was approaching a tunnel in Pingtung county, the Taiwan Railway Administration said.
"Heavy rains triggered mudslides and our train ran into the mudslides that caused four carriages to come off the tracks, of which three have been stuck in the tunnel" said Lu Chieh-shen, deputy director of the railway administration.
"There was just a few seconds before I saw the mudslides ... It was raining very hard," train conductor Ho Cheng-hung told reporters, adding that his vision was also affected as the train had just emerged from another tunnel before the incident.
The rest of the passengers were later put on another train and repair work was under way, but the administration said it was difficult to remove the carriages stuck in the tunnel in the bad weather.
Television footage showed repair workers in bulldozers trying to clear piles of rocks and mud covering the tracks as heavy rains continued to fall in the area.
The incident was expected to affect a total of 32 trains and 7,000 passengers throughout the day, it said.
Floodwaters rose to a depth of three metres and the storm disrupted air and rail traffic, forcing offices and schools to close.
Television footage showed rescuers in rubber boats helping evacuate people while cars were stranded on submerged roads.
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