The volcanic eruption spewed a river of red, hot lava and belched thick clouds of smoke almost six miles into the air, according to the CONRED, the government's national coordinator for disaster reduction.
The strong eruption was the second major one this year.
Guatemalan President Jimmy Morales plans to issue a state of emergency to be approved by Congress and urged people to heed warnings from emergency officials.
Flows of lava have reportedly struck at least one village, causing deaths and injuries.
Twenty people had to be treated in hospital for burns including at least six children, the health ministry said.
Dense ash blasted out by the volcano shut down Guatemala City's worldwide airport, civil aviation said.
Videos published by local media show bodies lying on top of a lava flow and rescuers attending to people covered in ash.
A river of lava destroyed homes and burnt people inside as the Fuego volcano pumped black smoke into skies southwest of Guatemala City this morning.
Ash fell on the Guatemala City area as well as the departments of Sacatepequez, Chimaltenango and Escuintla, which are in south-central Guatemala around the volcano.
Workers and guests were evacuated from the La Reunion golf club near Antigua.
The Conred head Sergio Cabañas told a local radio station that a river of lava had changed course towards El Rodeo.
Eddy Sanchez, director of the country's seismology and volcanology institute, said the flows reached temperatures of about 700 C.
Guatemala's disaster agency said 3,100 people had evacuated nearby communities, and the eruption was affecting an area with a population of about 1.7 million people.
Officials have advised citizens to wear masks due to falling ash, which has been raining down in four of Guatemala's administrative regions.