The incident occurred at the Masquerade nightclub, situated in the basement of a 16-story residential building on the European side of the city.
Authorities said the fire broke out after midday at 12:47 p.m. (0947 UTC) and was only brought under control by firefighters hours later.
"The number of people who lost their lives in the fire... in Gayrettepe of Besiktas district has increased to 29," governor Davut Gul's office said in a statement.
Television footage showed flames and a column of thick smoke bellowing from the upper floors of the building.
Istanbul's recently-reelected mayor, Ekrem Imamoglu, arrived at the scene and said that "the fire is under control, let's hope there are no further victims."
Authorities now are investigating the cause of the fire.
Police detained six people for questioning, including managers of the club and one person in charge of the renovations.
Masquerade could host up to 4,000 people with DJ performances and stage shows several times a week, according to its website.