The explosion at the firecracker factory took place Wednesday night.
Those injured have been shifted to Sriram Chandra Bhanj (SCB) Medical College and Hospital at Cuttack.
"Seven of those injured in the explosion had been received at our hospital and of them, two persons with critical burn died during treatment," Superintendent of SCB Medical College and and Hospital, Professor Shyama Kanungo, said.
In the aftermath of the explosion, Director General of Police R P Sharma suspended Santosh Behera, the Inspector-in- Charge of Bahabalapur marine police station, for dereliction of duty.
The explosion took place last evening when firecrackers were being made in the house at Bahabalpur, around 12 km from the district headquarters town of Balasore.