A BRT (bus rapid transit) bus caught fire in the city of Xiamen in Fujian Province at about 6:30 pm (4 pm IST), said an official from the municipal government.
"Forty-two people died and 33 others were injured after a bus burst into flames on an elevated bus lane in Xiamen City," state-run Xinhua news agency quoted an official as saying.
The fire broke out when the bus was 500 meters away from the Jinshan bus stop, the report said.
The fire occurred during the evening rush hour, when the city's BRT buses are usually jam packed with commuters, it said.
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A slightly injured passenger surnamed Yang said she was using her mobile phone when she smelled gasoline and saw another passenger smashing the window in an attempt to escape.
The fire spread quickly, she recalled.
The cause of the fire is under investigation, the report said.
Pictures taken by witnesses and posted online showed heavy smoke as the fire engulfed the bus, as well as survivors with burns on their arms and legs.
This is the second major fire accident in China in the past few days.
Hundred and 20 people were killed and 77 injured in major at a poultry factory few days ago.
In August last year, at least 36 people died when a double-decker sleeper bus collided with a methanol tanker and burst into flames in northern Shaanxi province, China's worst traffic accident in more than a year.
The accident was the deadliest since a fire on a bus carrying flammable materials killed 41 passengers in central China in 2011.