MEMPHIS, Tenn. (AP) _ A 10,000-gallon propane truck burst into a fireball and blasted off ''like an unguided missile,'' smashing into a house 125 yards away, killing two people inside and five motorists, authorities said.

The tanker skidded on an interstate exit ramp near downtown Friday morning, hit a wall and exploded, authorities said. An eighth person, the driver of an 18-wheel truck, was killed after plowing into a traffic jam caused by the wreck.

Ten other people were injured, including James M. Malone, 57, who was burned in another home and was listed in critical condition today at the Regional Medical Center.

The huge fireball destroyed six cars and damaged half a dozen houses in addition to the duplex crushed by the tanker truck, officials said.

Investigators from the National Transportation Safety Board in Washington were to inspect the scene today, said agency spokesman Michael Benson.

The truck crashed on Interstate 240, rupturing its tank and releasing liquid propane that turned into a gaseous cloud as it escaped. A spark apparently triggered the explosion, authorities said.

''All of a sudden everything was on fire,'' said Dorothy Hettinger, who lives next door to the wood-frame duplex. ''It was like an earthquake. My whole house was shaking.''

''The whole sky was white, just lit up,'' said Gaines Tennison, manager of a nearby sheet metal plant. ''You could feel the heat inside the building.''

The victims had little chance to escape the flames, said Frank Baker, a deputy fire chief at the scene.

''There was a huge fireball, maybe 700 to 800 feet,'' Baker said. ''It engulfed three or four cars.''

''I heard the explosion and saw the tanker flying through the air. It fell on the house and just blew up,'' said witness Marvin Mitchell.

''It was like an unguided missile,'' said John Stonecipher, a city fire marshal.

Witnesses said the tanker skidded on the 25-mph ramp, according to fire Capt. Benny McDow. The surface of the heavily used ramp onto Interstate 40 was dry.

''He was trying to exit and lost control and hit a retaining wall,'' McDow said. ''That exit there is short. It's one of those tight turns.''

The tanker remained mostly intact, but one end was blown out like a spent rocket. The burned-out hulks of cars were left scattered along I-240 and blackened a quarter-mile of grassy shoulder. A fender from the truck wound up in a tree, and a truck axle with four wheels attached ended up in the kitchen of James Edgeston's house two doors from the destroyed duplex.

''I didn't know the wheels were in there until I got back from the hospital,'' said Edgeston, who suffered a cut head but was not seriously hurt.

Some of the dead were so badly burned they had to be identified through dental records, Stonecipher said.

The dead included Shelanda Towles, a 10-year-old girl in one apartment in the duplex, and Iva J. Rubesheim, 87, who lived in another apartment, police said.

Police Lt. James Krepela identified the other dead as the tanker's driver, Randall Benson, 29, of West Memphis, Ark.; drivers Harrison G. Lee, 34, of Brighton; Robert Wardlow, 40, of Memphis; Tina Wiles, 30, and her passenger, mother-in-law Warner Wiles, 70, both of Vicksburg, Miss.

The accident left traffic backed up miles north and south of Memphis. Trucker David Bailey, 29, of West Helena, Ark., was killed when his tractor- trailer slammed into the rear of a car tied up in a traffic jam on I-240, said Patrolman Jim Greenland.

Eleven people were taken to hospitals, officials said. Six were admitted, including the elderly woman who died later, and five were treated at emergency rooms and released.