The quake, at 8:43am (2343 GMT on Friday), was centred in Iwate, a sparsely populated area around 300 km (190 miles) north of Tokyo. The low population and weekend timing may explain the lack of casualties from such a strong quake.
"I was outside and I wanted to rush back to the store, but I couldn't move because it was shaking," a liquor store owner told Fuji TV.
"Broken bottles are all over the store, and there's a smell of alcohol everywhere."
One of the people killed was caught in a landslide, Chief Cabinet Secretary Nobutaka Machimura told reporters. A second was killed as he ran out of a building and was run over by a car.
Kyodo news agency said more than 100 people were hurt while rail operator JR East said 2,000 were trapped on bullet trains that stopped between stations.
Earthquakes are common in Japan, one of the world's most seismically active areas. The country accounts for about 20 per cent of the world's earthquakes of magnitude 6 or greater, prompting tough building codes to try to limit damage.
A Japan Meteorological Agency official told a news conference that aftershocks were likely to continue for some time.
Four people were badly injured near the airport in the northeast coastal city of Sendai as a bus they were travelling in was jolted by the earthquake, TV reported.
"I was at home and we had finished eating breakfast," said Akira Nishimura, an official from the city hall in Kurihara in hard-hit Miyagi prefecture. "We got under the table", he said referring to himself, his four-year-old child and his wife.
The government had set up an emergency response centre, the Tokyo Fire Department sent a relief team and Iwate Governor Takuya Tasso asked for help from a military disaster relief unit, Kyodo News reported.
NUCLEAR PLANTS OK
Nuclear power plant operations were unaffected, although aftershocks continued and a government official said 22,000 people had lost electricity supplies.
The focus of the magnitude 7.0 tremor was 10 km (6 miles) underground in Iwate and Miyagi prefectures, the Japan Meteorological Agency said on its website.
Children and teachers at a daycare centre were slightly injured, and some highways were closed, Japanese television reported, with aerial pictures showing landslides that had swept through a house and swamped some roads.
In worst hit areas, the earthquake was measured at an upper 6 on a Japanese intensity scale, which measures ground motion. It may be impossible to keep standing in a quake with that reading, the meteorological agency says.
"It shook for about two minutes," Kazue Hishiya, manager of a hotel in Iwate prefecture, said by telephone.
"Three television sets fell off shelves, elevators have stopped, and we've turned off the boiler."
Another Kurihara city official said that a Japanese-style inn had been hit by a landslide, blocking the first floor, and that guests had moved to the second floor.
A JR East spokesman said it could take nine hours to complete safety checks and resume bullet train services.
A spokesman for Tokyo Electric Power Co Inc, Japan's biggest utility, said two of the company's nuclear power plants in Fukushima prefecture, just south of Miyagi prefecture, were running as usual and there were no disruptions from the quake.
An official at Tohoku Electric Power Co Inc said its nuclear plants at Onagawa and Higashidori were running as usual.
Top Japanese refiner Nippon Oil Corp's 145,000 barrel-per-day Sendai refinery appeared not to have been damaged after the quake, a company official said. The refinery is currently shut for scheduled maintenance.
Sony Corp and Fujitsu Ltd said they had stopped production at semiconductor factories in the region but had not found any damage so far.
In October 2004, an earthquake with a magnitude of 6.8 struck the Niigata region in northern Japan, killing 65 people and injuring more than 3,000.
That was the deadliest quake since a magnitude 7.3 tremor hit the city of Kobe in 1995, killing more than 6,400.