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An eyewitness, Mr Raji Oladimeji told the News Agency of Nigeria (NAN) that the accident occurred when the bus driver was trying to make U-turn on the rail line.
"We warned the driver not to make U-turn at that particular point when a train was approaching but he refused.
"So, it was in the process of making the turn that the approaching train crushed the bus where people hanging on the train fell off and three die instantly while other sustained various injuries," Oladimeji, electrician said.
He said some youths set the bus ablaze in anger while the injured were taken to a nearby hospital.
Mr Jerry Oche, the Lagos District Manager, Nigerian Railway Corporation, who confirmed the incident, said the accident happened at 9.30 a.m.
"We were informed that a bus was trying to make a U-turn at the railway line this morning at Agege Pen Cinema area when a moving train crushed it in the process.
"The police are on top of the incident bringing the situation to normalcy as youths went on rampage over the death of people who lost their lives in the accident.
"The information given to us by the police was that a number of people hanging on the train were affected where two people died while many others sustained injuries," he said.
Mr Ibrahim Farinloye, the Public Information Officer, National Emergency Management Authority, Lagos Office, said the injured had been taken to the hospital.