Police say a vehicle carrying mining explosives collided with a motorcycle near the town of Bogoso.
Images shared by local media showed a large plume of black smoke rising above destroyed buildings and scattered debris as residents call for help.
Graphic videos showed mutilated bodies of victims. A large crater can also be seen beside a road.
At least 59 people were injured, some of whom were in a critical condition, Information Minister Kojo Oppong Nkrumah said.
Ghana’s President Nana Akufo-Addo said the military had joined emergency efforts to help “contain the situation”, and the country’s disaster management agency had been tasked with bringing “rapid relief” to residents.
In an emergency notice, police said the “huge explosion” had occurred between Bogoso and the village of Bawdie.
Rescue efforts were under way and people have been told to move out of the area.
Police called on nearby towns to “open up their classrooms, churches etc to accommodate surviving victims”.
“We continue to urge the public to remain calm as we manage the situation.”
A team of police and army explosion experts were deployed to “avoid a second explosion” and secure the scene, the government said