Police said the blast occurred due to friction when the workers were mixing highly inflammable chemicals used for making fancy variety crackers at Sivasakthi Fireworks Factory.
The godown was completely destroyed in the fire following the blast.
Tamil Nadu Fire and Rescue Services personnel rushed to the factory and extinguished the fire after a couple of hours of battle.
The deceased were identified as K Muthukannan (21) and T Vijay (25).
The injured, including two women, were undergoing treatment at Tirunelveli Government Medical College Hospital and Sathankulam Government Hospital.
Nazareth police have registered a case and arrested Ramkumar, owner of the factory.