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The crowded tram was travelling in the centre of Milan at rush hour when it appeared to crash into the side of a building.
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The crowded tram was travelling on Milan's Vittorio Veneto street at about 16:00 local time (15:00 GMT) when it appeared to crash into the side of a building.
The person who died is thought to have been hit by the tram, and most of the injured were passengers. Numerous ambulances are at the scene and there are reports of people trapped in the wreckage.
Passengers described hearing a noise underneath the tram, after which it veered off, gathered speed and hit a building.
"I thought it was an earthquake. I was sitting down and I fell on the floor, along with the other passengers," one man told Ansa news agency. "It was terrible."
"I just heard an enormous bang," said 27-year-old Anna, who was in an office nearby, quoted by AFP. "I saw a bit of the tram had gone into a shop."
Civil protection teams have set up a tent at the scene to help the injured.
It is not clear what caused the derailment, although media reports suggested the tram had taken a sharp corner too quickly, as it turned out of Vittorio Veneto street.
Milan Mayor Giuseppe Sala and other city officials have arrived at the scene of the crash.
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Paolo Petrecca, whose gaffe-ridden commentary of the event went viral, stands down from his job.
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