The accident took place near dawn on a stretch of mountain highway 380 miles southeast of Lima that was so remote the nearest village didn't have a doctor.
"The bus is completely destroyed at the bottom of the ravine, and the worst of it is that we are isolated here like many towns in Peru, without the communication" that could have saved lives, said Cornelio Coaquira, mayor of Velille, who along with dozens of villagers tried to rescue survivors.
Victims were transported by truck to Espinar, where a doctor urged the governor to send gasoline for the town's one ambulance.
The cause of the accident is still under investigation, said Alberto Palomino of the Cusco Highway Police, who raised the death toll to 42 late Thursday.
Dr. Gabriela Cardenas, director of Espinar's medical post, told RPP radio the post has received eight injured people. She said at least two patients were in critical condition and needed to be taken to a larger hospital.
Most of the passengers on the bus were farmers and merchants returning to their homes for Christmas and a tradition Incan celebration called "Takanakuy" held between Dec. 24-26.
Velille school teacher Edison Olivares said the stretch of highway where the accident took place is in bad condition with many potholes.
In Peru, highway accidents are common because of driver imprudence, the poor state of roads and the lack of regulation of bus companies. According to official figures, transit accidents claim 3,500 lives a year.