The Colombian-registered bus was traveling to Quito when it hit a smaller vehicle in an area known as dead man's curve at about 3 a.m., Ecuadorean authorities said.
Residents described hearing a thundering noise like the world crashing down on them as the bus struck their homes in Pifo, a community 30 kilometers (18 miles) from Quito.
Michelle Manay said she woke up and ran outside to see the carnage. "There were some people alive and others who weren't," she said.
Col. Wilson Pavon, head of Ecuador's transit police, said the majority of the passengers aboard were Colombians, but some Venezuelans were also among the dead. Three people, including two minors, traveling in the smaller vehicle also died.
A small fleet of ambulances and first responders rushed to the crash site about two hours from Quito before dawn. They found the severely wrecked bus overturned and several homes adjacent to the highway damaged and strewn with metal debris.
Gen. Patricio Carillo of the Ecuadorean police told local reporters that it appeared the bus's brakes failed, causing the driver to lose control and hit an oncoming car before crashing into poles and houses as it rolled.
The investigation was continuing and the driver is hospitalized among the injured, Carillo said.
Officials spent the early morning combing through the bus and removing the victims.
"Among the tasks is identifying the bodies of the dead and coordinating with authorities in Colombia and Venezuela for their return," Carillo said.
It was the second bus tragedy in less than three days in Ecuador.
On Sunday, 12 people were killed and 30 more were injured when a bus carrying fans of an Ecuadorean soccer team overturned on a highway after a game.
Late Monday, relatives of the victims bid farewell to their loved ones at a collective wake held at the Barcelona club's stadium in Guayaquil.
Police were still investigating the cause of that crash, but some witnesses told local media the bus carrying members of the Sur Oscura fan club that accompanies Barcelona to all its away games was seen trying to overtake other vehicles shortly before the crash.
On average, 13 people die each day on Ecuador's roads, according to the highway safety organization Road Justice. It says roughly 95 percent are due to human error.
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