The police have detained a 55-year-old suspect, identified only by his surname Lin, for allegedly hurled a gasoline bottle into the facility in Wenzhou City in Zhejiang province last night, state-run news agency Xinhua said.
Dozens of senior citizens were in the center at the time, resting or playing chess and card games.
A 91-year-old woman died on the spot while another senior citizen in his 70s succumbed to his injuries in the hospital.
Many of the injured are in a critical condition, it said.
More From This Section
The incident happened after Lin had an argument with other senior citizens over the use of an air conditioning system at the center before he allegedly started the fire, police said.
The incident follows a very similar one on Friday when an arson at a nursing home for the elderly in northeast China's Heilongjiang province left 11 people dead.
The suspect in the Friday case, who died in the blaze, believed that a resident of the home had stolen USD 32.4 from him and became agitated.