The two women victims had run out of a dress shop and apparently were crushed when the roof slid off an unreinforced brick-and-wooden structure, reports CBS-owned KNX Radio's Stephanie Roberts.
Paso Robles' most-recognizable building is now rubble, reports CBS News Correspondent Steve Futterman. The 1892 clock tower was a two-story structure. Its roof also crushed a row of parked cars in the San Luis Obispo County community of 25,000 about 20 miles east of the epicenter.
Officials believe there were no other victims, although the owner of one car crushed in the rubble still has not been located. Teams searched the rubble with every tool they had, reports CBS News Correspondent Vince Gonzalez, including dogs and small cameras poked down into the ruins.
Residents from San Francisco to Los Angeles were shaken by Monday's quake, the first to cause fatalities in the state since a magnitude-6.7 temblor hit Northridge in 1994.
The main shock was centered in a sparsely populated area about 11 miles north of the coastal town of Cambria. It was followed Monday and Tuesday by more than 80 aftershocks larger than 3.0, the biggest of which was estimated at 4.7, according to the U.S. Geological Survey.
Gov. Arnold Schwarzenegger planned to tour downtown Paso Robles on Tuesday.
The state Office of Emergency Services said there was a 90 percent or greater probability that aftershocks of 5.0 magnitude or greater would follow in the next week.
"We're out of rescue mode and now it's just going to be general debris removal," said Battalion Chief Scott Hall of the Ventura County Fire Department.
Earlier in the day, the bodies of Jennifer Myrick, 19, of Atascadero, and Marilyn Zafuto, 55, of Paso Robles, were found on the street outside a dress shop, police Sgt. Bob Adams said.
A young boy suffered a broken arm and another person received minor injuries when a bakery collapsed, while citywide there were reports of about 40 minor injuries, said Adams.
"As soon as we felt the rocking and rolling and heard the glass starting to shake back and forth, we just started screaming, 'Get out! Get out!' and we just all ran for the door," jewelry shop manager June Ellart told CBS News' The Early Show.
When she got to a nearby park, she realized her parents and two customers hadn't gotten out of the store.
"I turned around and saw a big cloud of white dust and I just started screaming for my parents because they weren't around," Ellart told co-anchor Harry Smith. "And then after the dust cloud moved away for a second, we saw Nick and Pat [her parents] and the customers emerging."
More than 40 structures in Paso Robles were damaged. About 10,000 homes and businesses were without power in the San Luis Obispo area, said John Nelson, spokesman for Pacific Gas and Electric.
The quake was felt in the control room of the Diablo Canyon nuclear power plant operated by PG&E. Nelson said there appeared to be no damage to the plant and that it was functioning normally.
The quake shook the Hearst Castle in San Simeon, the estate of the legendary publisher William Randolph Hearst. The castle reported no injuries and no immediate signs of any serious damage but was evacuated as a precaution. People in downtown Los Angeles, 185 miles southeast, felt a sustained rolling motion.
Other than Paso Robles, damage appeared minor elsewhere in the region known for wineries and horse ranches. Several people were reported hurt by falling barrels at a winery, San Luis Obispo County authorities said.
The last big quake hit the area in 1952. This latest shaker caught researchers by surprise.
"It's on a fault system that we don't know as well as we like and this earthquake will help us to get to know it better," Ross Stein of the USGS told CBS News.
Monday's quake was the state's most powerful since 1999, when a nonfatal magnitude-7.1 temblor struck the desert near Joshua Tree. The last one of a similar size in the area was in 1952, said Ross Stein of the USGS in Menlo Park.
The 1994 Northridge quake hit a densely populated area near Los Angeles and killed 72 people, injured 9,000 and caused an estimated $15.3 billion in insured losses.