The train derailed near Maryville, close to the city of Knoxville, carrying acrylonitrile, a flammable, toxic compound that poses respiratory risks, firefighter Kermit Easterling said.
Some 5,000 residents are being evacuated, and firefighters are going door to door wearing breathing equipment to get people away from the fire, he said.
Firefighters are not battling the flames because of the dangers of acrylonitrile, and hazmat -- hazardous material -- teams have been called in to access the situation.
The train, which is also carrying containers of liquid petroleum gas, derailed just before midnight Wednesday, Easterling said.