The violence erupted late on Friday following a trivial local incident which angered members of a particular community in Motikaranja area. This soon flared up into rioting with stone-pelting and arson, targeting vehicles and shops.
Police forces were rushed to the locality but they failed to control the violence and resorted to caning and firing teargas shells and plastic bullets to quell the rampaging crowds. Prohibitory orders were subsequently imposed in the affected areas.
The cause of the death of the two persons, whose identities are still unknown, is not clear yet.
Aurangabad Police Commissioner Milind Bharambe said there were two rounds of violence, one Friday evening followed by another on Saturday, but "now the situation is under control".
"It was a small issue... It escalated due to rumours and the tensions spread... Some anti-social elements indulged in setting ablaze shops and vehicles in the locality," Mr Bharambe told the media.
The worst-hit areas were Shahganj, Nawabpura, Rajabazaar and Angribaug which continued to remain calm but tense this evening.
Local eyewitness accounts said over three dozen shops belonging to small businessmen were burnt, and many private vehicles and at last two police vans were also torched.
Chief Minister Devendra Fadnavis has been apprised of the matter while Minister of State for Home Deepak Kesarkar is rushing to Aurangabad to take stock of the situation, an official said in Mumbai.
Kesarkar and Aurangabad Collector Uday Chaudhari, besides Mr Bharambe met this afternoon and discussed the situation, details of which were awaited.
They have appealed to the people of the city to remain calm and not be misled by rumour-mongers.
Leader of Opposition in Assembly Radhakrishna Vikhe-Patil said Mr Fadnavis should own up moral responsibility for failing to prevent the riots and submit his resignation.
"It is a clear failure of the Police Department and since the past four years, the Home Department is handled by Fadnavis. He has proved to be ineffective in maintaining law and order with incidents reported daily from all over the state and must quit," he demanded.
Terming it as "a total failure of the intelligence department," Leader of Opposition in Council Dhananjay Munde demanded a judicial probe into the riots and compensation for the victims.
Opposition Congress state President Ashok Chavan called upon the people to maintain peace and "foil the nefarious designs of communal and divisive forces" trying to spread social unrest between communities.
"The rioters have burnt over 100 shops in the city. What was the police doing when these anti-social forces were on a rampage the whole night? Do they enjoy government patronage," Mr Chavan asked.
On the reasons behind the flare-up, several triggers are bandied about, including selective disconnection of illegal water connections belonging to members of a particular community, an altercation between a mango seller and a customer, and other localized issues.
Meanwhile, All India Majlis-E-Ittehadul Muslimeen President Asaduddin Owaisi appealed to Mr Fadnavis to take strong action against the miscreants indulging in the rioting.
Located in the Marathwada region of the state, Aurangabad is world-renowned for the famous Ajanta-Ellora Caves, Bibi Ka Maqbara and other historical landmarks.