Residents in the Saskatchewan border town of Spy Hill are under a state of emergency after a huge train derailment on Saturday morning.

Fire crews are still on scene trying to extinguish the massive blaze.

The fire broke out after a CN train derailed just 13 kilometres west of Manitoba.

CN officials have confirmed 36 cars were involved in the derailment including several cars carrying propane and plastic pellets.

Several homes were evacuated nearby; however no injuries have been reported.

A two kilometre area around the crash site is cordoned off and a no-fly zone is in effect.

A temporary track is already under construction to allow trains to pass the area while it remains closed for investigation.