Fire fighters and army personnel worked frantically through the morning at the Rana Plaza building in Savar, 30 km (19 miles) outside Dhaka, to rescue people trapped inside.
One fireman told Reuters that about 2,000 people were in the building when the upper floors jolted down on top of each other.
Bangladesh's booming garment industry has been plagued by fires and other accidents for years, despite a drive to improve safety standards. In November last year, 112 workers were killed in a blaze at a factory in an industrial suburb of Dhaka.
"It looks like an earthquake has struck here," said one resident as he looked on at the chaotic scene of smashed concrete and ambulances making their way through the crowds of workers and wailing relatives of those still inside.
"I was at work on the third floor, and then suddenly I heard a deafening sound, but couldn't understand what was happening. I ran and was hit by something on my head," said Sohra Begum a worker at one of the garment factories.
, the government's health secretary, told Reuters that at least 86 people were confirmed dead. Another official said hundreds were being treated for injuries.
, in charge of the area's police station, said factory owners appeared to have ignored a warning not to allow their workers into the building after a crack was detected in the block on Tuesday.
Firefighters and soldiers using drilling machines and cranes worked together with local volunteers in the search for other survivors from the building, which pancaked onto itself and stood only about two stories tall.
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