State-run Xinhua news agency reported 33 people were killed and dozens injured while pictures on state television showed severe damage to various buildings and infrastructure in Zhaotong city.
The epicentre was monitored at a 12-km depth, the China Earthquake Networks Centre (CENC) said.
"I felt a strong jolt on my fifth-floor home and some small objects in my home fell off the shelves," a resident in the county seat of Ludian told Xinhua.
Most people rushed out of buildings to the streets.
Electricity was cut, telecommunications services were affected and it was hard to reach people in Ludian by mobile phone, the resident said.
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The quake toppled and cracked many buildings, particularly old ones and residential homes.
Police and paramilitary officers are assembling and rushing to the quake-hit areas.
Civil affairs authorities sent 2,000 tents, 3,000 folding beds, 3,000 quilts and 3,000 coats to the quake-hit region.
The Yunnan provincial earthquake administration has sent a 30-member working team to the epicentre and will soon hold a meeting to evaluate the situation.
Ludian has a population of 265,900 in its seven townships.
Zhaotong is about 300 kms from Kunming, the capital city of Yunnan.
In 1974, a 7.1-magnitude earthquake in the same place caused over 1,400 deaths.
Earlier today, a 5.0-magnitude earthquake jolted Xigatze Prefecture in Tibet close to Indian and Nepal borders.
Xigatze is located close to the Arunachal Pradesh border.
The epicentre was monitored at a depth of 10 kms, CENC said.