A picture allegedly showing the fake money on the ground after crowds were cleared:
Cui Tingting, 27, said she had picked up some of the bank notes but had thrown them away when she realised they were fake.
"It's too cruel. People in front of us had already fallen to the floor, and others were stepping all over them," she said.
Photographs posted online showed densely packed crowds of revellers along the Bund, one of the most famed tourist areas in Shanghai that runs along the bank of the Huangpu River.
The Bund, renowned for its pre-1949 architecture, is the former financial district of China's commercial hub and now a popular tourist destination, packed with high-end restaurants and expensive boutiques.
It is also notorious for being overcrowded with spectators during major events.
One photo from the scene showed at least one person doing chest compressions on a shirtless man while several other people lay on the ground nearby, amid debris. Another showed people receiving first aid on the road and large numbers of police cordoning off the area.
Rescue workers tried to resuscitate victims lying on the pavement while ambulances waited nearby.
Relatives of a victim hug as they wait at a Shanghai hospital where injured people are receiving treatment (Aly Song/Reuters)
Mr Chen posted to Twitter that the stampede occurred right before midnight.
“As a native of Shanghai, I believe this is the worst (very rare) stampede incident in Shanghai history in recent decades. Shock!!”
Chinese state media Xinhua said many of the dead and injured were students - the youngest was reported to be 16. Authorities were investigating the cause of the stampede.
Dozens of distraught relatives gathered in the hospital lobby waiting for news, with some expressing frustration over a lack of information.
"Many relatives have asked to go inside and asked the hospital to give us a list of the injured, including the conscious and unconscious ones who are being treated in there, but nobody got back to us," said a relative who gave her family name as Fan.
"Six hours have passed, but we still don't have any information," she added.
A laser countdown display that last year drew 300,000 to the Bund, had been cancelled this year because of the crowds.
The number caused chaos in the city when a lack of adequate public transport forced revellers to walk home.
Emergency services in attendance in Shanghai (Weibo)
It is believed officials called off the countdown this year believing it would dissuade some from attending.
However the famed light show continued as planned, with a further private light display held in the Waitanyuan area at the intersection of the Suzhou Creek and the Huangpu River.
Shanghai's historic Bund riverfront runs along an area of often narrow streets amid restored old buildings, shops and tourist attractions.
The China Daily newspaper in February reported that the city's population was more than 24 million at the end of 2013.
Most large gatherings in China are carefully controlled by authorities but the country has seen other incidents in which overcrowding has caused panic and deaths.
Last year, 14 people - some of them children - were killed and 10 injured in a stampede that broke out as food was being distributed at a mosque in China's Ningxia region.
Also last year, six students were killed in a stampede at a primary school in Kunming city in the southwest after the accidental blocking of a stairway corridor.
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