The mayor of Perryton, which is near the Oklahoma border, said the tornado caused deaths but could not say how many.
The tornado destroyed communication towers and a trailer home park.
Surrounding areas are sending emergencies crews to assist Perryton, home to about 8,000 people.
There are 75 in hospital said Perryton Fire Chief Paul Dutcher.
At least 30 mobile homes took a “direct hit” from the tornado and were damaged or destroyed, according to Mr Dutcher.
The local hospital, Ochiltree General Hospital, told ABC News they are operating on generators amid widespread power outages.
The National Weather Service (NWS) reported the tornado touched down around 17:00 local time (23:00 BST) on Thursday.
Republican US Representative Ronny Jackson said on Twitter that he is “praying for the people of Perryton tonight” and, in addition to being in touch with Perryton’s mayor, is monitoring the situation with his staff.
Multiple tornadoes may have hit the town, according to local media.
The severe weather threat will continue for southern states over the weekend. States across the Plains and mid-south could see more hail and damaging winds, but tornadoes are a possibility.
Hail and power outages
Daily hailstorms have plagued the southern US since Saturday, and on Thursday, around 43,000 people were without power in Texas and Oklahoma, according to Poweroutage.us.
Elsewhere in the south, in Abbeville and Eufaula, Alabama, witnesses reported at least two tornadoes on Wednesday.
The mayor of Eufaula, Alabama, told local media a tornado carved a nearly four-mile path through town, tearing down at least one building and toppling 40 trees.
No injuries or deaths have been reported. This was the fourth time a twister hit the small town in as many years, the mayor said.
In neighbouring Georgia, two people narrowly escaped a house that collapsed during storms in the south-west of the state, the town’s sheriff was quoted as saying by local media.
Trees and downed power lines were also reported in other parts of the state.
Watch: Are tornadoes in the US getting worse?
Much of the south remains under severe storm warnings, according to the NWS, with officials warning of severe thunderstorms, tornados, gale-force winds and flooding.
Another NWS meteorologist, Juan Hernandez, said: “It’s a little late in the year to be getting daily hailstorms across the southern plains, this number of consecutive days.”
Meanwhile, on Thursday more than 33 million people in Texas, Florida and Louisiana were under heat advisories, according to the NWS.
