Officials said the blast hit the Karl Marx colliery near Donetsk in the heart of the coalfield at 5am (0200 GMT) about 1 km (3,300 feet) underground. Mining operations had been suspended and repair work was being carried out at the time.
Television pictures at the 110-year-old mine showed production machinery on the surface reduced to rubble. Windows were smashed and a gondola was overturned.
Marina Nikitina, spokeswoman for the regional mine safety inspectorate, said 37 men were missing. Four staff on the surface suffered burns and had been hit by equipment thrown about by the blast.
"The shaft has been destroyed. It is impossible to go below," she said.
Coal Industry Minister Viktor Poltavets said rescue workers were trying to restore at least one of the shafts.
"All rescue teams are now engaged in trying to restore at least one shaft so that we can get down into the mine," he said on Ukrainian television.
Unmanned gondolas had been sent underground, but had been unable to proceed beyond a depth of 600 metres.
"We are readying a new cage with communications equipment and we will send people down to find out what happened to the gondolas," he said.
Gas explosions are a frequent occurrence in Ukraine's outdated mines, many of which are unprofitable and date from the 19th century. Many coal deposits are at a depth of 1 km or more, making mining operations more difficult.
The Karl Marx mine, in Yenakiyevo, northeast of Donetsk, was one of 23 where work had been suspended to check on documented safety violations and only restoration and repair work was permitted.
Reports from the region said such work was being conducted at the colliery on Sunday and dangerous concentrations of gas had been detected shortly before the blast.
First Deputy Prime Minister Oleksander Turchynov suggested the mine could soon be closed.
"I can tell you already that is unlikely this mine will be working any longer," Interfax Ukraine quoted him as saying before leaving Kiev for the accident site.
"Data from instruments shows that when the explosion occurred the miners were already trying to get out. But unfortunately, they didn't make it."
Ukrainian miners were in the forefront of forces seeking change in the dying days of communism, but post-Soviet authorities have come under pressure to shut down the pits.
Eleven miners were killed in the last explosion in the Donbass coalfield two weeks ago. Three blasts at the Zasyadko mine in Donetsk late last year killed 106 men in two weeks.