State media announced that Maung Thaw district, about 230 kilometres west of Rangoon, was under dusk-to-dawn curfew.
"Nineteen shops, 386 houses and one hotel were burned," President Thein Sein's official website said. "Four men and a woman were killed with knives."
The exact number of casualties was hard to determine because many people had fled to the hills, villagers said.
"Around 100 people were injured," said Zaw Than, a resident of Maung Thaw. "Soldiers are still searching for victims who are hiding in the hills."
Troops were fully deployed and military doctors were sent by plane to the area on Saturday morning.
The rampage was reportedly sparked when Muslims attacked a Buddhist funeral procession.
Six days earlier, a mob killed 10 Muslims in nearby Taunggup to avenge the rape and murder of a local woman, allegedly by Muslims. Police detained three Muslim suspects.
The 10 people died when a 300-strong mob attacked and destroyed a bus carrying some Muslim passengers from nearby Thandwe to Rangoon.
Muslims are a minority in predominantly Buddhist Burma. Rakhine State borders Bangladesh, which is mostly Muslim.
