Dozens of people with injuries were being brought to the main hospital in central Kathmandu. There was no immediate estimate on fatalities.
Several buildings collapsed in the centre of the capital, including centuries-old temples, said resident Prachanda Sual.
He said he saw people running through the streets in panic. Ambulance sirens blared and government helicopters hovered overhead.
National radio has warned people to stay outdoors because more aftershocks are feared.
Old Kathmandu city is a warren of tightly packed, narrow lanes with poorly constructed homes piled on top of each other.
The US Geological Survey revised the magnitude from 7.5 to 7.9 and said the quake hit at 11:56 am local time (11:41 IST) at Lamjung a shallow depth of 11 kilometers.
Mohammad Shahab, a resident from Lahore, Pakistan, said he was sitting in his office when the earthquake rocked the city near the border with India.