The tornado hit the scenic Brazos River courthouse town of Granbury about 8 p.m. Wednesday.
Hood County sheriff's Lt. Kathy Jiveden reported the multiple fatalities, but she had no estimate of dead or injured.
She said crews "are going house to house" looking for those trapped, injured or dead in the rubble of demolished homes in the DeCordova Ranch and Rancho Brazos Estates neighborhoods. Those areas are in the southern part of the town of about 8,000 residents near Lake Granbury.
AP's earlier story is below.
A tornado slammed into a North Texas lakefront town Wednesday night, demolishing homes and injuring an undetermined number of people, officials said.
The tornado in Granbury was part of a system of severe thunderstorms that spawned several tornadoes across North Texas, dropping large hail in some areas. The National Weather Service said a tornado watch would remain in effect for more than 30 counties until early Thursday morning.
The extent of the damage and injuries was not immediately clear in Granbury, about 35 miles southwest of Fort Worth. However, police reported the hardest hit area was the Rancho Brazos subdivision and adjoining areas along Lake Granbury.
At Stumpy's Lakeside Grill in Lake Granbury, the storm took diners and workers by surprise. Some people rushed inside from the patio and ducked under tables as the wind gusts and hail started, but nobody was injured, said Eric Martinez, a cook. Then they looked across the lake and saw several homeowners' boat docks "just get torn apart," he said.
"The boat docks just flew off, and they're actually gone," Martinez said, adding that the boards and other debris landed in some yards.
The restaurant didn't appear to sustain any damage, but cars in the parking lot had dents from the large hail, he said.
Donna Martin, the bartender at the VFW in Granbury, said she was watching the clouds circulate in the sky when the tornado sirens went off. She said softball-size hail also pounded the area.
Another tornado hit the small town of Millsap, about 40 miles west of Fort Worth. Parker County Judge Mark Kelley said roof damage was reported to several houses and a barn was destroyed, but no injuries were reported.
Hail as large as grapefruit also pelted the area around Mineral Wells on Wednesday evening. A police dispatcher reported only minor damage.