The passenger service from Thionville in northeast France hit the goods train near Bettembourg close to the French border around 0800 GMT, they said.
“One person was recovered dead from the train,” Luxembourg police said in a statement. “Two injured persons were admitted to the hospital.”
A further six people suffered minor injuries, police added. Around 100 rescue workers are at the scene along with psychological support workers, they said.
The causes of the accident “are yet to be determined”, said the Luxembourg train company CFL, which operated the passenger train. Passenger services between Luxembourg and Thionville have been suspended with bus services replacing them for now, it said.
In 2006 six people were killed and 23 injured when a passenger train collided with a freight train at Zoufftgen, in northeastern France, near the site of Tuesday’s accident.