Esther Padilla, spokesperson for the government of Castilla-La Mancha region, tella TVE that one of the trains - managed by the Iryo company - was carrying 146 passengers plus one baby, while the Renfe-managed train had 397 passengers on board.
"The number of confirmed deaths, currently at 68, will almost certainly rise," she said. "The situation is going to worsen."
Emergency services are at the scene helping those injured and looking for survivors.
The accident happened when a high-speed train travelling from Madrid to the south of the country collided with another train that was apparently stationary. The crash caused at least two carriages to fall down an embankment.
A passenger on board one of the trains told local media there was a heavy impact about 40 minutes into the journey.
Firefighters, paramedics and other emergency personnel are at the scene, along with three helicopters.
According to reports, the government believes that human error linked to signalling is a likely cause of the crash.
The national rail operator Renfe has set up a help line for relatives of those who were on board the trains.
And Parliament has cancelled events for the day. Prime minister Pedro Sánchez posted on social media that he was “upset” at the news and offered his solidarity and support to those hurt and their families.
In January, a collision between two trains on the same route killed 46 people.
Health Minister Mónica García has told Spanish radio that the images from the scene of the crash show there has been a "significant impact [that] points to a major tragedy".
Some of the casualties have been taken for treatment at a health in Urda not far from the crash, and Spanish TV reports that those needing hospital treatment will be taken to the city of Toledo to the north.
Meanwhile, there are fears the number of casualties will rise.
The mayor of Los Yébenes, not far from Urda, says he's spoken to local police about what they have seen. Jesús Pérez said they had described "truly nightmarish scenes".