But there were no immediate reports of deaths or significant damage, officials in Chile said.
In its first quake damage report, the Office of National Emergencies said one person was injured in a car accident in the Bio Bio region.
"For now we do not have reports of any fatalities. There is some evidence of people injured, unfortunately from pieces of walls that fell," Interior Minister Rodrigo Hinzpeter said.
The USGS said the quake struck at 2237 GMT some 32 kilometers (20 miles) northwest of Talca in Chile's Maule region, the same area ravaged by a massive 8.8 earthquake in late February 2010.
Hundreds of people ran into the streets in Talca in panic during the quake, which was felt for nearly a minute.
Chilean news media reported electrical blackouts and broken phone lines in the area around Talca, 300 kilometers (186 miles) south of the capital, Santiago.
Tall buildings shook in Santiago, and fear gripped people in shopping centers, supermarkets and the city's stadium where a football game was under way.
Some injuries were reported from falling debris in the interior of a Catholic church in Santiago.
"We were at mass when material started falling," a priest told the local medial. "The people became frightened and left."
The USGS initially reported the quake's magnitude as 7.2 but later downgraded it to 7.1.
According to the USGS, which monitors earthquakes worldwide, the epicenter of Sunday's earthquake was 30 kilometers (18.6 miles) below the ground surface.
The Maule coastal region has been periodically shaken by powerful aftershocks since the February 27, 2010 quake, which claimed more than 500 lives and billions of dollars in damage.
Most of the deaths in that quake occurred from tsunamis that slammed into coastal towns and villages.
On Sunday, Chile's Office of National Emergencies (ONEMI), which came under fierce criticism for not issuing a tsunami warning on time in 2010, issued an evacuation order for all coastal residents living along a long swath of central southern Chile.
But it later canceled the order when naval experts said there was no chance of a tsunami.
The Pacific Tsunami Warning Center in Hawaii, taking note of the earthquake in Chile, said "a destructive Pacific-wide tsunami is not expected."
