The accident occurred at Masayipet in Veldurthi mandal of Medak district, about 70 km from here, when the bus of a private school was taking the students to the school located at Toopran.
As the bus was crossing the unmanned gate, Nanded-Secunderabad passenger train hit the vehicle.
Driver of the bus was also killed. The toll could rise as many of the injured are in a critical condition.
There were 30 children in the bus and it was proceeding to Toopran from Islampur.
Telangana Chief Minister K. Chandrasekhar Rao expressed shock over the accident. He directed officials to provide immediate and best treatment to the injured.
Senior officials of South Central Railway have rushed to the scene.
Andhra Pradesh Chief Minister N. Chandrababu Naidu also expressed grief over the tragic accident and asked Telugu Desam Party (TDP) cadre in Telangana to participate in relief work.