Const. Ian MacDonald with Abbotsford Police says several train cars were derailed by the collision, which happened just before 3 a.m.
Emergency crews found the wreckage of a Volkswagon Jetta and its driver dead at the scene.
Several hydro poles were also knocked down by the crash, initially cutting power to several thousand customers in the city's east and downtown, though BC Hydro's website showed most electricity restored by early afternoon.
MacDonald says crossings in town are cleared so traffic should resume to normal, though work cleaning up the train continues.
An investigation is underway, but it's too early to say what lead to the collision.