Police believe a gas cylinder exploded in the kitchen of the Birch nightclub, located near a popular beach. The venue was packed with revellers who had come to hear a Bollywood DJ.
Four people from the same Delhi family and 21 staff were among the victims, Goa police said, adding that most had died of suffocation.
The nightclub's manager has been arrested and an arrest warrant for the owner has been issued.
Goa is a former Portuguese colony on the Arabian Sea. Its nightlife, sandy beaches, and resorts attract millions of tourists annually.
Eyewitnesses told the BBC of scenes of panic in the bustling nightlife area.
One eyewitness said that it was a usual Saturday night and holidaymakers were enjoying themselves.
He said: "I was outside the club when I heard screams, I didn't initially understand what was going on.
"In a bit, it became clear that a massive fire had broken out. The scenes were just horrific."
Though the main entrance is wide, the crossing on the small lake leading to the main structure is narrow and that made it difficult for firefighters to reach the spot.
The BBC saw what appeared to be melted remains of chairs, tables and plants in one corner of the club.
