Firefighters managed to bring the blaze under control by around 9:00 am (0600 GMT), more than nine hours after it erupted, according to an AFP journalist at the scene.
The explosion ignited a “huge ball of fire that spread widely”, government spokesman Isaac Maigua Mwaura posted on X.
“Consequently, the inferno further damaged several vehicles and commercial properties, including many small and medium sized businesses,” he said.
“Sadly, residential houses in the neighbourhood also caught fire, with a good number of residents still inside as it was late at night,” he added.
At least three people died and 271 were admitted to various hospitals in Nairobi, Douglas Kanja, Deputy Inspector General of Police, told reporters.
The fire broke out just before midnight on Thursday in the Embakasi neighbourhood southeast of the capital.
Images broadcast by local media showed a huge fireball close to several homes.
Felix Kirwa, a motorcycle taxi driver, told AFP he had just returned home when he heard two blasts that caused his house to shake and shattered a window.
The father of three grabbed his youngest child — a four-year-old boy — and ran out of the house, losing track of his other children in the confusion.
“I didn’t know where the two other children ran to until this morning when I located them, and they are safe,” he said, nursing a bandaged broken leg.
According to an AFP journalist, several houses and vehicles were burned, with images of the scene showing the wreckage of charred vehicles.
– ‘Like an earthquake’ –
“We were in the house and heard a huge explosion,” James Ngoge, who lives across the street from where the fire broke out, told AFP.
“The whole building was shaken by a huge tremor, it felt like it was going to collapse. At first, we didn’t even know what was happening, it was like an earthquake.
“I have a business on the road that was completely destroyed.”
Stella Mbithi, a roadside vegetable vendor, was serving customers when she saw the sky turn orange with flames.
“We all took off. It was chaotic because people were screaming all over and vehicles were honking horns. I fell down several times,” she told AFP. “I am lucky to be alive.”
The explosion forced many of the area’s residents to spend the night outside, with large columns of black smoke seen billowing from the area as police cordoned off the affected area.
Some people could be seen collecting their belongings and surveying the damage to their homes.
“The scene has now been secured and a command centre is now in place to help coordinate rescue operations and other intervention efforts,” Mwaura said.
In 2018, a blaze at Nairobi’s Gikomba market killed 15 people and injured at least 70.
Nine of the dead were in an apartment block next to the market while six others — including four children — died of their injuries in hospital.
The pre-dawn blaze destroyed many of the market’s wood and tarp stalls where second-hand clothes, shoes and vegetables are sold.
In 2011, more than 100 people were killed in a slum in the Embakasi area when fuel spilled from a pipeline and burst into flames.