The tornado "devastated a good portion of" Greenfield, a town of about 2,000 residents 45 miles (70 kilometers) southwest of the state capital Des Moines, Iowa State Patrol Sergeant Alex Dinkla told a news conference.
"Earlier today, the town of Greenfield was struck by a devastating tornado. Local, county, and state emergency responders quickly initiated search and rescue operations once the tornado passed through the area," Dinkla said.
"Sadly, we can confirm that there have been fatalities with this tornado, also injuries have been sustained by residents here in the Greenfield area," he said.
Dinkla did not give a number of deaths but said about a dozen people had been transported to hospital.
After searches of the area "we do believe we have everybody accounted for," he said.
Images on the Des Moines Register website showed scenes of widespread devastation in Greenfield, with numerous homes flattened and reduced to splintered piles of lumber and rubble, with trees also uprooted and cars overturned.
The town would be under mandatory curfew from 10:00 pm until 7:00 am Wednesday, Dinkla said, adding that the curfew was expected "to last for some time."
Iowa Governor Kim Reynolds signed a disaster emergency proclamation for 15 counties in response to the severe weather, including Adair County which covers Greenfield, her office said.
"(Our)... prayers are with all the communities and families impacted by today's severe weather, and especially those who tragically lost their lives in the Greenfield area," she said in a statement.
"It was just a few weeks ago that tornadoes hit several other Iowa communities, and it's hard to believe that it's happened again."
Reynolds said she planned to visit Greenfield on Wednesday to assess the damage and was committed to providing all the necessary resources.
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