The accident happened at 1:00 pm local time (1100 GMT) as the train was between the Jesus and Plaza de Espana stations.
The death toll is expected to rise. Two of those injured in a critical condition, and emergency services are continuing to search the wreckage for bodies.
Officials said some of the bodies were "unrecognisable". One of the injured was the train driver. Another was a pregnant woman whose injuries are said to be life-threatening.
Special units trained in disaster management were deployed in central Valencia.
Those injured were taken to five hospitals around Valencia.
Officials say two carriages of the train came off the rails in a tunnel and rescue services had led more than 150 people to safety.
A terrorist attack has been ruled out as a cause of the accident. Rail officials official believe it was caused because a wheel broke while the train was travelling at high speed.
"It seems this unfortunate accident was caused by excess speed and a wheel breaking just before it entered the station," government spokesman Luis Felipe Martinez said.
Zapatero offers condolences
The emergency services were alerted by a phone call from a trapped passenger, Spanish media reported.
Last September three underground trains collided in Valencia on the same line, injuring 29 people.
Spain's Prime Minister Jose Luis Rodriguez Zapatero, on a visit to India, offered his condolences to the families of those affected and decided to cut short his visit.
The accident comes days before Pope Benedict XVI is due to visit Valencia, with preparations being made for hundreds of thousands of pilgrims to use the city's public transport network.
A Vatican spokesman said the Pope was quickly informed of the Valencia accident, and had offered prayers for the victims and their families.