The Amtrak train -- Train 91 -- traveling between New York and Miami derailed in Cayce, outside the state capital Columbia, in the collision with the CSX freight train, which took place at around 2:30 AM (1300 IST).
Amtrak, the national US railway service, said in a statement that the lead engine derailed along with some passenger cars. Eight crew members and 139 passengers were on board.
US media reported injuries ranged from cuts and bruises to broken bones.
The National Transportation Safety Board (NTSB) said it was investigating the incident.
Officials added that although 5,000 gallons of fuel spilled following the crash, there was no danger to the public.
"The incident is very near the state farmers' market and other residential areas but right now, everyone is safe," said Derrec Becker, public information officer at the South Carolina Emergency Management Division.
Speaking to CNN, passenger Derek Pettaway said he was traveling south from Philadelphia to Orlando in a sleeper cabin when he was awoken by the impact of the crash.
"Nobody was panicking," he said. "I'm pretty sure everybody was asleep and I think people were in shock."
It is not known how many people were traveling on the freight train, or whether one of the two trains was stationary at the time of the collision.
The accident is sure to raise questions about the safety of the nation's railways.
It comes just days after another Amtrak train carrying several dozen Republican lawmakers including US House Speaker Paul Ryan hit a garbage truck in Virginia, killing one person and causing six others, including a congressman, to need hospital treatment.
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