The blaze broke out in a loft where 11 people were sleeping, causing part of the roof to collapse, fire officials said.The cause of the fire is being investigated.
Prato, in Tuscany, has become a centre for Chinese-run factories producing low-cost garments.
Tuscany's regional governor, Enrico Rossi, called for greater co-ordination between Italy and China on the thousands of businesses that have sprung up as well as better supervision of the buildings, and calls for a day of mourning after the death of seven Chinese.
He said some garment factories had links to Chinese organised crime.

Prato Mayor Roberto Cenni told La7 TV that authorities inspected hundreds of the businesses each year, shutting down the ones found to be operating illegally.