President Otto Perez declared three days of official mourning for the tragedy, one of the deadliest in the Central American nation in years.
The red bus fell 100 meters (330 feet) down the canyon, crashing next to a river in the municipality of San Martin Jilotepeque, 64 kilometers (40 miles) west of the capital, Guatemala City.
Rescue workers installed cables between the banks of the river to move the bodies on stretchers above the water, their grim task becoming more difficult as it started raining.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
Local residents who rushed to the scene volunteered to help rescuers pull victims stuck in the wreckage.
The government said in a statement the cause of the accident was not immediately known and an investigation was underway following initial reports of a brake malfunction.
Survivors said the bus was overloaded when it crashed, according to local media.
The bus, owned by a company named San Martineca, had a valid license to operate, as well as insurance coverage for victims, the communication ministry said.
"Forty people were confirmed dead at the site of the accident and three more at the hospital," Cecilio Chacaj, a fire department spokesman, told reporters.
