The stampede occurred at 15:00 GMT as the final act of the day was beginning at the festival, which up to 1.4 million people were attending, according to local media.
Witnesses told of how ever more people, some drunk, attempted to get into the festival grounds by walking through a tunnel that led under a motorway and up to the former goods railway station where the massive party was taking place.
Sixteen people had died on the scene when the crowd in the tunnel panicked, with some being trampled to death, police said. More victims died later in hospital. The festival grounds were reportedly, at the time of the crush, closed off due to the high number of people already inside.
Early Sunday, police drastically increased the number of people reported injured to 342 from an earlier estimate of 80. A police spokesman could not provide information on the severity of the injuries.
German Chancellor Angela Merkel expressed her sorrow and shock at the fatal accident.
"In these difficult hours my thoughts are with the relatives of the victims. My sympathies and my sorrows go out to them," the chancellor said.
"The young people came to celebrate, instead there were deaths and injuries. I am appalled and distressed at the suffering and pain," she said.
Police said that 10 people were resuscitated at the scene by emergency workers.
The identities and nationalities of the dead have not yet been released.
The Love Parade, one of the world's largest electronic music events, had been founded in Berlin in 1989 as a peace parade shortly before the fall of the Berlin Wall.
German President Christian Wulff said "such a catastrophe causing death, suffering and pain during a peaceful festival of joyful young people from many countries is terrible."
The president called for a full and immediate investigation of the incident.
The exact cause of the accident is not yet clear, although witnesses said that police had been informed of the dangerous build-up of people shortly before the fatal crush occurred.
"We were standing in the middle of it. More and more people were trying to get to the grounds. We were almost through the tunnel and were standing at the entrance, but (the crowd) went no further," 21-year-old Fabio told DPA.
"We went back through the tunnel, and my girlfriend and I could scarcely breathe. We had to use our elbows to get through. We told the police that it would soon come to a mass panic," he said.
Video footage from the crush showed people clambering over fences and up concrete walls to escape from the overfilled tunnel.
A spokesman for the Duisburg city council told DPA that many of the injuries resulted from people falling from temporary steel fences at the site as they attempted to escape.
Even as emergency services attempted to reach the accident site, barring an adjacent motorway to land helicopters, the party continued. Organisers feared that a further wave of people trying to exit the event would create a second, possibly uncontrollable panic.
DJs played and the crowd continued to dance until at least an hour after the accident, seemingly unaware of the dozens of ambulances pouring into the accident site.
DJ Dr Motte, the founder of the Love Parade event - which has since been spun off to numerous cities around the world - said that the Duisburg organisers were to blame for the crush.
Unconfirmed reports suggested that only one tunnel exit was available for the hundreds of thousands of people wanting to access the main stage of the event on the railway yard grounds, as well as leave the area.
"They have made a huge management mistake. How can they let people go through only one tunnel to the grounds? It's a scandal," Motte said.