The magnitude 6.8 quake's epicentre was about 80km north of Mount Everest, the world's highest mountain. Tremors also shook buildings in neighbouring Nepal, Bhutan and India.
The impact was felt across the Shigatse region of Tibet, home to 800,000 people. The region is administered from Shigatse city, the traditional seat of the Panchen Lama, one of the most important figures in Tibetan Buddhism.
Many homes in Shigatse city were reduced to rubble, video released by Tibet Fire and Rescue showed. Rescue workers searched through the debris of a ruined home and pulled out one injured person, it showed.
Adding to the misery for those left homeless, temperatures in the region had fallen to minus 6 degrees Celsius late on Tuesday, and were forecast to drop as low as minus 16 degrees Celsius overnight.
The China Earthquake Networks Centre located the epicentre at Tingri county, known as the northern gateway to the Everest region, at a depth of 10km. The US Geological Service put the quake's magnitude at 7.1. It struck at 9:05am. (0105 GMT).
At least 126 people were known to have been killed and 188 injured on the Tibetan side, China's state-run Xinhua news agency reported. There were no reports of deaths elsewhere.
Footage broadcast on state television CCTV showed rescuers performing CPR on an injured person and soldiers erecting temporary shelters.
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