The incident follows the collapse of a building housing five garment factories in April that killed 1,129 people and triggered renewed scrutiny of "made-in-Bangladesh" clothes commonly sold in the West.
"Primarily we suspect the water supply of the Starlight Sweaters factory was poisoned or contaminated," local industrial police officer Mahfuzur Rahman told AFP from Gazipur, a suburb of Dhaka.
B. Ali, the administrative officer of the factory, told AFP the number of affected workers could be as high as 600.
"The workers have been sent to different hospitals after they reported stomach pain and started vomiting. We estimate the number could be up to 600," he said.
Late on Wednesday, hospital officials said all the sick workers were out of danger.
Officials said the workers were engaged in making garments for big-name Western labels but did not immediately identify the brands.
The factories in the doomed Rana Plaza building just outside Dhaka had made clothing for Western retailers including Italy's Benetton, Britain's Primark and Spain's Mango.
An official from Bangladesh's Garment Manufacturers and Exporters Association (BGMEA), which represents the country's 4,500 garment plants, said the contamination could have been deliberate.
"We are suspecting that it was poisoning of the water. It could be some sort of pesticide," S.M. Mannan, a vice president of the BGMEA, told AFP.
"This is an A-grade factory. It has its own water supply which comes from a deep tube well, so there is no scope for contamination. Someone might have mixed poison to the water," he said.
Of those, who fell sick, around 40 were admitted to hospital while the rest were released after treatment, according to doctors and BGMEA officials.
"The patients who were rushed to hospitals from the garment factory were complaining of stomach pain and vomiting," a medical officer at Gazipur Civil Surgeon office, Jahangir Alam, told AFP.
"But everyone's condition is stable and is out of danger," Alam said, adding water samples from the factory had been sent for laboratory tests to find the cause of the problem.
Earlier in the day, police fired rubber bullets and tear gas at a protest by the families of missing garment workers presumed dead in the factory disaster.
Officials in the Dhaka suburb of Savar, where the building collapsed on April 24, said a thousand-strong crowd of relatives and garment workers gathered at the site of the wrecked building.
They demanded that authorities publish a full list of missing workers to allow families to claim compensation.
"There were up to 1,000 protesters. They blocked a key highway and staged a sit-in in front of the ruined site for nearly three hours," said local industrial police inspector Amjad Hossain.
Savar police officer Sheikh Farid Uddin said his officers clashed with the protesters after they failed to move off the highway and began throwing stones.
"In retaliation, we had to fire rubber bullets and tear gas to disperse them," Uddin said.