The incident happened on Tuesday at 10:40 a.m. local time (14:40 GMT) near the city of Wadena. There have been no reports about injuries or deaths yet.
A spokesperson for Canadian National Railway Jim Feeny has told CBC that 26 out of 100 cars of the train had derailed. Six of them contained toxic materials, including hydrochloric acid or caustic soda, he added.
According to CBC, the burning cars are giving off toxic smoke, making local officials keep people several miles from the scene.
About 50 people were evacuated from the nearby town of Clair. People were also evacuated from other farm homes in the area, Canadian police said as quoted by CBC.
A hazardous team of the railroad operator is reportedly en route to the crash site.