The village in the Lotschental valley, home to 300 people, had been evacuated last week due to the impending danger.
The huge collapse on the Birch Glacier in Switzerland's southern Wallis region happened at around 3:30 pm.
Officials said the missing person, a 64-year-old man, was not one of the evacuated residents, and added that there were no known injuries.
"The unimaginable has happened," Blatten's president Matthias Bellwald told a press conference.
"We have lost our village, but not our hearts.
"Even though the village lies under a huge pile of rubble, we know where our homes and our church must be rebuilt," he added.
The glacier collapse had been expected for several days.
Footage posted on YouTube showed a huge cloud of ice and scree hurtling down the mountain slope and into the valley where the village is located. The mud and rockfall hit the houses.
"The worst-case scenario has occurred," said Raphael Mayoraz, head of the Wallis canton's Natural Hazards Service.
He said three million cubic metres of material had accumulated on the glacier, and then tumbled down into the valley.
"This is a very rare event," he said. "We don't know exactly what's still up there, but most of it has fallen."
- Search and rescue effort -
Swiss national broadcaster RTS aired drone footage showing the debris had subsumed and smashed buildings, and pushed homes into one another.
Wallis police said the missing 64-year-old man was a local resident who, according to their information, was in the area at the time of the incident.
A search and rescue operation was launched, with three rescue specialists airlifted to the scene, while a drone with a thermal imaging camera was also used.
"Despite significant efforts, the man has still not been found," police said.
Mayoraz said a blockage two kilometres long had formed in the valley floor, where the Lonza river flows, with a small lake growing behind it.
"It's like a small mountain," he said.
Though unlikely, a debris flow cannot be ruled out completely, he added.
"That's a risk we have to monitor," he said.
- 'Nature is stronger' -
"It's terrible to lose your home. In these difficult times, my thoughts are with the residents of Blatten," Swiss President Karin Keller-Sutter wrote on X.
Two of Switzerland's seven government ministers, defence and civil protection minister Martin Pfister and environment minister Albert Rosti, went to the valley.
Pfister called it a disaster of "striking proportions".
"We assure you of our support, today and in the weeks and probably years to come," he told the press conference, adding that the army was on its way.
Rosti said the government "will do everything possible to give Blatten a future, although it will take a lot of effort and time".
"Nature is stronger than humankind, as mountain dwellers know," he added.
A significant increase in activity was observed on the glacier from Tuesday night and intensified during Wednesday.
The Alps mountain range in Europe has seen its glaciers retreat in recent years due to warming that most scientists attribute to climate change.
Swiss glaciers, severely impacted by climate change, melted as much in 2022 and 2023 as between 1960 and 1990, losing in total about 10 percent of their volume.
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