Four carriages overturned in the smash, smoke billowing from the wreckage, as bodies were lain out under blankets along the tracks.
The wagons piled into each other and folded up like an accordion. One was ripped apart by the force of the crash, one of its ends pushed up into the air.
Rescue workers recovered 65 bodies from the wreckage and four more victims died later in hospital, said a spokesman for the Galicia high court.
He added that some of the carriages had not yet been fully searched, leaving the prospect that the toll from one of Spain's worst rail disasters could yet increase.
A total of 143 people were injured.
Francisco Otero, 39, who was inside his parents' home just beside the section of the track where the accident happened, said he "heard a huge bang. As if there had been an earthquake."
"The first thing I saw was the body of a woman. I had never seen a corpse before. But above all what caught my attention was that there was a lot of silence, some smoke and a small fire," he told AFP.
"My neighbours tried to pull out people who were trapped inside the carriages with the help of pickaxes and sledgehammers and they eventually got them out with a hand saw. It was unreal."
The train had left Madrid and was heading for the town of Ferrol as the Galicia region was preparing celebrations in honour of its patron saint James.
A witness told radio Cadena Ser that carriages overturned several times on a bend and came to a halt piled up on each other.
Public television TVE said the train may have derailed because it was speeding at the time of the accident but a spokesman for state railway company Renfe said it was too soon to say what caused the accident.
"There is an investigation underway and we have to wait. We will know what the speed is very soon when we consult the train's black box," a Renfe spokesman said.
"Deadly High Speed" the El Mundo daily's headline ran. The paper reported that the train had been travelling at 220 kilometres (136 miles) per hour in an urban zone with a speed limit of 80 kph.
The El Pais suggested the train was travelling at 180 kilometres per hour when the accident happened.
The accident happened on a stretch of high-speed track about four kilometres (2.5 miles) from the main train station in Santiago de Compostela, the destination of the famous El Camino de Santiago pilgrimage which has been followed by Christians since the Middle Ages.
The train was the Alvia model which is able to adapt between high-speed and normal tracks.
Emergency services workers in red jackets tended to injured passengers lying on a patch of grass as ambulance sirens wailed in the background.
"There are bodies lying on the railway track. It's a Dante-esque scene," Alberto Nunez Feijoo, president of the regional government, told news radio Cadena Ser.
A municipal building was made available for psychological counselling and as a centre for providing information.
Carriages were lying across the tracks, some of them jammed alongside a concrete siding.
Prime Minister Mariano Rajoy, who is from Santiago de Compostela, was to visit the scene of the accident on Thursday.
"I want to express my affection and solidarity with the victims of the terrible train accident in Santiago," he said in a Twitter message.
Pope Francis called for prayers for the victims.
"He joins the families in their sorrow and calls for prayers ... in this tragic event," Vatican spokesman Federico Lombardi told reporters during the pope's visit to Rio de Janeiro.
The town hall of Santiago de Compostela called off planned concerts and firework displays that had been planned as part of the festivities in honour of its patron saint.
The disaster was one of the worst in the history of Spain's rail network.
In 1944, hundreds were killed in a crash also between Madrid and Galicia.
In 1972, 77 people were killed in a derailment in Andalusia in the south.
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