The area's local administration says flooding has wiped out a quarter of the city after dams burst in a huge storm.
The Red Cross believes some 10,000 people are feared missing across the country.
Storm Daniel barreled across the Mediterranean, into a country crumbling from more than a decade of conflict.
Over 1,000 bodies have already been recovered in Derna alone.
The following graphic images show people checking on shrouded bodies on the ground.
Here's the head of the International Federation of the Red Cross and Red Crescent Societies delegation in Libya, Tamer Ramadan.
"Our teams on the ground are still doing the assessment but from what we see and from the news coming to us, the deaths toll is huge, it might reach to thousands really."
A Reuters journalist on the way to Derna saw vehicles overturned on the edges of roads, trees knocked down, and abandoned, flooded houses.
One local official said what he saw there was "disastrous," and that "bodies are lying everywhere."
This man says the flood comes every year, but this time is worse. He says people have been on the streets since yesterday.
Derna is bisected by a seasonal river that flows from highlands to the south.
It's normally protected from flooding by dams, as seen in this satellite imagery.
But video posted on social media shows the remnants of a collapsed dam, seven miles upstream of the city where two river valleys converged.
Now, it's surrounded by huge pools of mud-colored water.
"There used to be a dam," says the man filming the video. "Now it is soil."
Convoys of aid and assistance were heading towards Derna and also Al Badya, which is around 62 miles away.
Turkey and other countries rushed to send support to Libya, including search and rescue vehicles, rescue boats, generators and food.
Libya is politically divided between east and west.
The internationally recognized government in Tripoli does not control eastern areas.
Though it is believed to have dispatched aid to Derna, with at least one relief flight on its way.
