Police fired warning shots to disperse rioters after the Buddhist-Muslim clashes in the town of Lashio in Shan state, according to presidential spokesperson Ye Htut, who said one man was "hacked to death".
He said the security forces were taking action to halt the unrest.
Several episodes of religious violence have exposed deep rifts in the Buddhist-majority country and cast a shadow over widely praised political reforms since military rule ended two years ago.
In March at least 44 people were killed in religious unrest in central Myanmar with thousands of homes set ablaze.
Communal violence last year, mainly targeted at Rohingya Muslims, left about 200 people dead and displaced up to 140,000 people in the western state of Rakhine.
Residents said mobs armed with sticks were roaming the streets of Lashio on Wednesday while an AFP reporter saw two houses ablaze.
The authorities on Tuesday imposed an overnight curfew after the unrest erupted following an alleged attack on a local Buddhist woman who suffered burns.
A 48-year-old Muslim man was arrested over that incident, according to state-run broadcaster MRTV.
A Muslim orphanage, a mosque and several shops were destroyed by rioters, another government official said, requesting anonymity.
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It seems to me that we are prone to punching above our weight. First there is this Muslim shopkeeper beating a buddhist female customer, then the Muslim lady hitting a buddhist monk and now this attack on the buddhist woman buy a Muslim man. The result in all cases is wide spread riot where Muslims lost the most. Just like the riot in Indian Gujrat. A few hindoos were burnt in a train by Muslims that results in murder of thousands of by hindoos. In Myanmar the Muslims are less than 4%. A better strategy for Muslims should be to lie low and organise themselves till such time they attain a sizable proportion of the populace. Then they can flex their muscles and can even ask for a partition.
People say stop killing for faith. I say stop getting killed for faith .I say why not change your religion and join the majority main stream. I mean deep inside think of your gods but outside you can change your religion .Whats wrong . After all its a question of hungry stomachs.