The government mouthpiece New Light of Myanmar blamed the attack on the Shan State Army, one of the largest ethnic rebel groups battling the military regime for autonomy.
About 25 SSA rebels attacked the saw mill late Wednesday in southern Shan State, the paper said, adding that they "seized nine saw mill workers, hit and slashed to death eight of them".
The mill was set on fire, while the eight workers were killed in a nearby gorge. One man survived and was hospitalised with multiple stab wounds, it said.
Myanmar rarely admits to attacks along its borders. Since Cyclone Nargis struck the country four weeks ago, leaving 133,000 dead or missing, state media has largely ignored the conflicts in the border areas.
Myanmar has suffered decades of armed rebellion along its borders, and no government has ever controlled all of the nation's territory.
The military has ruled Myanmar since 1962, justifying its grip on power by claiming the need to fend off the rebels.
Since the current junta seized power in 1988, the generals have signed ceasefires with 17 of the armed groups.