The quake hit 200 miles (325 kilometers) southwest of the capital, Santiago, at a depth of 22 miles (35 kilometers) at 3:34 a.m. (0634 GMT; 1:34 a.m. EST), the U.S. Geological Survey reported.
The epicenter was just 70 miles (115 kilometers) from Concepcion, Chile's second-largest city, where more than 200,000 people live along the Bio Bio river, and 60 miles from the ski town of Chillan, a gateway to Andean ski resorts that was destroyed in a 1939 earthquake.
An Associated Press Television News cameraman said some buildings collapsed in Santiago and power was out in parts of the city. Phone lines were either down or busy, making confirmation of damage difficult elsewhere, especially further south toward the epicenter. The quake was felt in Argentina as well.
The Pacific Tsunami Warning Center issued a warning for Chile and Peru, and a less-urgent tsunami watch for Ecuador, Colombia, Panama, Costa Rica and Antarctica.
"Sea level readings indicate a tsunami was generated. It may have been destructive along coasts near the earthquake epicenter and could also be a threat to more distant coasts," the center said.
The U.S. west coast tsunami warning center said it did not expect a tsunami along the west of the U.S. or Canada but was continuing to monitor the situation.
The largest earthquake ever recorded struck the same area of Chile on May 22, 1960. The magnitude-9.5 quake killed 1,655 people and left 2 million homeless. The tsunami that it caused killed people in Hawaii, Japan and the Philippines and caused damage to the west coast of the United States.
Associated Press Television News cameraman Mauricio Cuevas contributed to this story.