They say the fire began when a band on stage started a fireworks display at the Kiss nightclub in the city of Santa Maria, in Rio Grande do Sul state.
Reports say there was only one exit and panic spread as people tried to get out. Many victims reportedly died from inhaling toxic fumes.
The fire is now out and bodies are being removed from the scene.
“Fire services are looking for other victims. We can’t give an exact number of victims. People started panicking and ended up treading on each other,” fire chief Guido de Melo told local media.
A reporter at the scene told local radio that the nightclub had a capacity for up to 2,000 people and was believed to be full on a Saturday night.
Thick smoke engulfed the venue after acoustic insulation caught fire, officials say.
Fire crews reportedly knocked through a wall to help those trapped inside escape.
The death toll could be as high as 130, the reporter said.
Hundreds of people have been taken to hospital.