The blast yesterday evening, just before the fireworks display was to start, was believed to have been caused by a food stall vendor putting gasoline into an electricity generator without turning it off, Kyodo News service cited police sources as saying.
Eighteen of the victims suffered major burns and other serious injuries, including a 13-year-old boy who remained unconscious at a hospital, Kyodo said.
The annual festival in Fukuchiyama, Kyoto prefecture, was canceled after the explosion. Last year, it drew around 110,000 spectators.