The New York-based group says 800 buildings and houseboats were burned in one neighbourhood alone after clashes between the Buddhist Rakhine and the Muslim Rohingya communities.
State television reported Friday night that 67 people had died, 95 been injured and 2,818 houses were burned down from Sunday through Thursday in seven of Rakhine state's townships.
The senior Burma director at Human Rights Watch, Phil Robertson, has accused the Burmese government of being ineffective in dealing with rising ethnic tensions in the country.
"They have failed to anticipate these issues. They have failed to intervene. They've failed to address the root causes of discrimination," he said.
Rakhine state spokesman Win Myaing on Saturday said there were no immediate reports of fresh clashes between the Buddhist Rakhine and the Muslim Rohingya communities.
Human Rights Watch said it captured images of the destruction in a predominantly Rohingya area.
The long-brewing conflict is rooted in a dispute over the Rohingyas' origins. Although many Rohingya have lived in Burma for generations, they are widely denigrated as intruders who came from neighbouring Bangladesh to steal scarce land.
The UN estimates their population in Burma, also known as Myanmar, at 800,000, but the government does not recognize them as one of the country's 135 ethnic groups. Human rights groups say racism plays a role in this decision.
Many Rohingya, who speak a Bengali dialect and resemble Muslim Bangladeshis, have darker skin and are heavily discriminated against.