The epicentre of the shallow 6.7 magnitude quake was some 10.3 kilometres (6.4 miles) south of the major Turkish resort of Bodrum, a magnet for holidaymakers in the summer, and 16.2 kilometres east of the island of Kos in Greece, the US Geological Survey said.
"We have two dead and people injured," a hospital official on Kos told AFP, adding that the victims were killed when the ceiling of a building collapsed.
Kos mayor Georges Kyritsis told Skai radio the two victims were foreigners. A local journalist, interviewed by the same station, said the victims were found in a bustling part of the town.
The Greek secretary of state for the merchant navy Nektarios Santorinios, said the injury toll had risen to 120.
Reports said the state hospital in Bodrum was evacuated after cracks appeared, with new patients being examined in a garden outside.
The governor of the southern Mugla province -- where Bodrum is located -- said some people had been slightly injured after falling out of windows in panic.
Television footage showed throngs of worried residents and holidaymakers in Bodrum's streets.
"The biggest problem at the moment are electricity cuts in certain areas (of the city)," Bodrum mayor Mehmet Kocadon told NTV television.
"There is light damage and no reports that anyone has been killed" in the area, he added.
The quake struck Friday at 0131 local time (2231 GMT Thursday).
