The attack in Tana River district, Coast Province, took place late on Tuesday between the Orma and Pokomo groups, the region’s police chief said.
Most of the dead were women and children, he said. Police have been deployed to the area.
The clash is the worst since post-election violence rocked the country after disputed polls four years ago.
“It is a very bad incident…. They [the victims] include 31 women, 11 children and six men,” regional deputy police chief Joseph Kitur told AFP news agency.
Those killed were either hacked to death with machetes or burned alive, he said.
The BBC’s Frenny Jowi in the capital, Nairobi, says violence between the two communities is often reported, but not on such a huge scale.