Panicked residents poured into the streets after the authorities ordered them to flee to higher ground, while President Michelle Bachelet declared parts of northern Chile hit by the offshore quake to be disaster zones.
"The street lights were busted, people ran terrified. After the earthquake there were several aftershocks," Veronica Castillo told AFP from Arica, 1,000 miles north of the Chilean capital Santiago.
Military officials will be sent the areas to prevent looting and disorder, she said.
The quake struck at 8:46 pm local time at a depth of 10 kilometres, 83 kilometres from Iquique on Chile's northern coast, the United States Geological Survey said.
The Hawaii-based Pacific Tsunami Warning Center issued an alert for residents living along more than 4,800 kilometres of coastline in South and Central America.
It said waves of more than two metres had been generated.
Chilean Interior Minister Rodrigo Penailillo said at least five people were killed and three seriously injured. He said late yesterday the tsunami alert would last at least another six hours.
Still, the control tower at Iquique airport was hit, as were roads out of the city. Power cuts in the city of Arica left 80 per cent of it in the dark.
Amid Chile's evacuation order, its Ecuadoran and Peruvian counterparts also issued warnings.
Ecuador later reduced its alert from red to amber but maintained the higher level of vigilance on the exposed Galapagos Islands out in the Pacific.
Tremors were felt as far inland as Bolivia, and the quake was followed by a weaker 6.2 magnitude aftershock.
CNN showed footage of streets full of panicked people and some buildings burning brightly against the night sky.
The rush to evacuate to safe areas caused traffic jams, but no cuts in telephone service or drinking water were reported. There were power outages in some areas.
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