The collision occurred at a level crossing near a wooded area in Millas - near the town of Perpignan - and left at least 20 people injured, 11 seriously.
The bus was carrying 16 youngsters aged between 13 and 17 from a secondary school in Millas and was "shredded" by the collision, according to witnesses.
The front half of the vehicle was left on the track pointing at an upwards angle, with the body crushed towards the middle.
One of the train passengers, named as Barbara, told local media the impact was "very powerful", adding that she thought the train was going to derail.
The train company - state-owned SNCF - tweeted a "heartfelt message of support to the victims and their families".
An SNCF spokesman added that the train was running at 80kph (49.7mph) at the time of the accident and there were 25 passengers on board, three of whom were "slightly injured".
The dead and critically injured were all travelling on the bus, with the injured survivors taken to hospitals for urgent treatment.
The train was travelling west from Perpignan to the town of Villefranche de Conflent when it hit the back of the bus, which the mayor of neighbouring Saint-Feliu-d'Amont, Robert Olive, described as a "vision of horror".
"It was a classic crossing, well equipped and lit," a SNCF spokesman said.
"Several witnesses confirmed that the barrier had come down, so it worked."
Seventy firefighters were called to the scene, alongside 10 ambulances, two air ambulances and two police helicopters.
A "crisis coordination unit" was also set up, as was a medical aid centre to provide psychological support to those who were involved in the accident, according to a local official.
Transport minister Elisabeth Borne described the collision as a "terrible accident" and said on Twitter that she was heading to the scene - around 530 miles from Paris and close to the Spanish border.
She was joined by Prime Minister Edouard Philippe, who said the process of identifying the victims was "extremely difficult" and that investigators would prioritise giving "precise information" to the families affected.
"I wanted to express my sadness and emotions that are shared by everyone who were direct or indirect witnesses to this accident," he added.
President Emmanuel Macron tweeted his condolences to "the victims of this terrible accident".
All trains between Villefranche and Perpignan have been stopped and those seeking rail travel in the area have been warned of major delays.
Witness questioning got underway on Thursday evening as part of an "involuntary homicide" inquiry, and the drivers of the bus and train are to be tested for alcohol and drugs.
Mr Philippe said on Thursday night that the "circumstances of this terrible drama are still undetermined".
The accident is the third involving several fatalities on French railways in the past four years.
In November 2015, a high-speed TGV train being tested between Paris and the northeastern city of Strasbourg derailed after hitting a bridge at 243kph (150mpg), killing 11 people on board.
Seven people were killed in July 2013 when a commuter train crashed in a station south of Paris.
The accident was blamed on a signalling defect.