The death toll is expected to rise above 40, according to Adao Severino Junior, fire chief of the city, while more than 50 people have been injured. The population of Mariana is thought to be between 1,000-2,000.
The dam was used at Samarco Mineracao, which BHP Billiton jointly owns with local company Vale, to hold back waste water from the mining giant's iron ore operation.
Images from the isolated area in Minas Gerais, the southeast of the country, showed heavy trucks overturned, homes covered in red mud and a car on the roof of a house.
BHP Billiton, which holds a 50 per cent in the iron ore operation, said it was "concerned for the safety of employees and the local community".
"We are in the process of obtaining more details from Samarco Mineração," the company added. "We will provide updated information on the situation as soon as we are in a position to do so.