China's state-run Xinhua news agency, quoting Dhaka's Deputy Commissioner Md. Mohibul Haque, put the death toll 109 with at least 40 injured taken to hospitals.
"Doctors have stated condition of 10-12 as very much critical," Haque said.
Rescue efforts early Friday led to the discovery of more bodies in smoldering ruins in Nimtoli, one of the most crowded sections of Dhaka, the country's densely populated capital city.
Haque told Xinhua the fire broke out around 9:20 p.m. Thursday when an electric transformer exploded igniting a chemical warehouse.
The blaze quickly spread to neighboring homes and shops.
The Bangladesh Daily Star reported most of the victims were women and children. At least eight homes and 20 shops were gutted.
The report said the fire was so severe many bodies were charred beyond recognition and were found in alleyways, in front of shops, on staircases and in rooms.
Some witnesses said the fire was started by two exploding transformers. Others said it began in a bakery and then spread to the transformers, the Star reported.
As the inferno raged, its flames rose as high as 200 feet.
"With power supply snapped, it looked like a hell on earth. All I could hear were shrill cries coming out from every direction," a mother, who escaped with her child, told the newspaper. "I don't know how other members of my family and I rushed out of our fourth-floor flat."
Hundreds of residents risked their lives to assist firefighters in fighting the blaze, and in rescue operations. The fire was put out after a few hours, leaving rescue workers the grim task of counting the dead and taking the injured to hospitals.
One of the structures burned was the six-story Gulzar Khan building, the Star reported. An engagement party was in progress on the third floor when the fire started, killing many of the people in attendance.
Firefighters and rescue teams were hampered by narrow lanes and alleys in the area.
The fire was the second tragedy to strike Dhaka this week. A five-story building collapsed Tuesday, killing 25 people.