Rescuers were still searching for victims on Monday after the landslide happened in the district of Mbankolo, northwest of Yaounde, on Sunday evening.
Landslides are frequent during the rainy season in the city of nearly three million people, where shacks are often put up on its many hills.
Torrential rainfall caused a dam containing a man-made lake situated on higher ground to burst, according to public broadcaster CRTV and a local official.
Paul Atanga Nji, minister of territorial administration, said at the site that the death toll had risen to 27, after rescuers earlier announced 23 had died.
"Yesterday we pulled out 15 people who had died and this morning we have found eight," the fire service's second in command David Petatoa Poufong told reporters.
"We are still looking," he said.
Distressed relatives watched as the bodies of some of the victims covered in sheets were driven away by firefighters.
Two women collapsed to the ground in tears.
A couple of exhausted looking local residents held the corners of a large sheet carrying what one said were the bodies of two children, an AFP journalist reported.
- Torrents of water, mud -
A security cordon was in place to keep onlookers and media back from the spot where the landslide happened.
But images broadcast on TV showed an entire section of a hill had collapsed and what remained of houses apparently constructed from wood, dried earth bricks and metal sheeting.
"There was a landslide after heavy rain. The water swept away everything in its path," Daouda Ousmanou, a local administrative official announced on public radio.
The sea of mud destroyed about 30 houses, according to CRTV, which showed images apparently from during the night of torrents of water and mud continuing to flow.
"We've seen the wall, which had been built by the Germans to contain the water, buckle under the pressure," Cyprien Djou, a local town hall official told AFP.
"The lake completely overflowed onto the homes built on the hillside."
"We immediately began looking for victims. The rescuers already found us at the site," he added.
Minister Atanga Nji deplored that houses had built "in a dangerous area".
"We will work to make people aware so that all these non-buildable areas are freed up... every year there are deaths," he said.
In November last year, at least 15 people died when a landslide engulfed members of a funeral party in Yaounde's working-class district of Damas, on the eastern outskirts.
Forty-three people died in the western city of Bafoussam in 2019, when heavy rains caused a landslide that swept away a dozen flimsy dwellings on a hillside.
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