Hundreds of rescuers were racing to pull passengers from the wreckage in a wooded area near Bad Aibling, a spa town about 60 kilometres southeast of Munich.
Several carriages were overturned.
"We have eight dead on the trains," said police spokesman Juergen Thaimeier, adding that about 100 people had been injured, 55 of them seriously.
Local police spokesman Martin Winkler had earlier given a toll of four dead.
But rescuers subsequently found another four bodies in the train wreckage.
The "tragic accident occurred on the single-track route between Rosenheim and Holzkirchen this morning shortly after 7:00 am (0600 GMT)," regional rail company Meridian, a subsidiary of the French group Transdev, said in a statement.
The cause of the accident was not immediately clear.
Rainer Scharf, a police officer from the southern state of Bavaria, said that "given the severity of the accident, we believe the two regional trains collided head-on at a low speed."
He added that the priority was to "rescue the many injured".
The police tweeted that several hundred emergency services workers were on the scene in the rural area.
Rescue workers from nearby Austria were also on site, rolling news channel NTV said.
About a dozen helicopters were also deployed, with television footage showing them waiting in a clearing outside the forest, from where rescuers were emerging with stretchers carrying the injured.
A journalist for local broadcaster Bayerischer Rundfunk reported that rescuers were climbing on the wreckage and pulling people out.
The rail route was closed to traffic, as well as two local roads.
"The accident is an enormous shock for us," said Bernd Rosenbusch, who heads the Bavarian rail company BOB that operates trains on the route.
"We will do everything to help travellers, their relatives and our employees," he added.
The accident is believed to be the first deadly train crash since April 2012, when three people were killed and 13 injured in a collision between two regional trains in the western German town of Offenbach.
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