The accident occurred last evening when some final touches were being carried out on semi-finished crackers which exploded at the unit in Vetturayapuram.
Two sheds were destroyed under the impact of the explosion, they said.
The accident was said to be triggered by sparks caused by friction while chemicals were being mixed, police said.
Sivakasi is a hub of the fireworks manufacturing industry and mishaps, mostly in small scale units, recur despite government initiatives to enforce safety norms.