Several cars went off the track in the tunnel after a power surge triggered an alarm that caused the train to stop abruptly, the Emergency Situations Ministry said in a statement.
Rescuers have recovered seven bodies and are working to extract 12 more trapped in two wrecked train cars, Alexander Gavrilov, deputy chief of the Moscow emergency services, told reporters in a televised call.
Of the 150 reported injured, least 50 of them are in grave condition, Moscow health department chief Georgy Golukhov was quoted as saying by the Itar-TASS news agency.
The Russian capital's airports and transit systems have been hit by several terrorist attacks in the past two decades but multiple Russian officials on Tuesday vigorously dismissed terrorism as a possible cause.
Vladimir Markin, spokesman for the Investigative Committee, said in a televised briefing that investigators were considering a fault in the train cars among the possible causes.
Gavrilov of the emergency situations ministry said outside the Park Pobedy station in west Moscow that over 1,100 people were evacuated from the train, which was stuck between two stations.
Park Pobedy is the deepest metro station in Moscow's subway system — 84 meters (275 feet) deep, which made the rescue particularly hard. The station serves the vast park where the World War II museum is located.
The Moscow Metro is one of the most famous subway systems in the world, known for its palatial interiors with mosaics, chandeliers and marble benches.
Traffic on between the stations is likely to be suspended for at least two days, Mayor Sergei Sobyanin said.
Injured people were being taken out of the subway station on stretchers. Paramedics carried one woman covered with a blanket to the lawn by the famous Triumphal Arch and put her on a medical helicopter, one of four seen taking off from the park.
In the scorching summer weather authorities provided drinking water to survivors, some of whom were sitting near the station's entrance in a state of a shock.
Earlier photos on social media showed passengers walking along the tracks inside the dimly lit tunnel.
A man with a bloody cut on his brow told Rossiya 24 television outside the Park Pobedy station that he felt a jolt and the train abruptly came to a halt.
"There was smoke and we were trapped inside," he said. "It's a miracle we got out. I thought it was the end."
While accidents are regular occurrences in the Moscow Metro, deadly incidents are rare.
Nataliya Vasilyeva contributed to this report.