Video footage and pictures showed a helicopter flying above the building in Miryang, engulfed by heavy grey smoke and surrounded by multiple fire trucks.
The five-story structure housed a nursing home as well as the hospital, and the South’s Yonhap news agency said 41 people had been killed.
“Two nurses said they had seen fire suddenly erupting in the emergency room,” said Fire Chief Choi Man-woo, but the cause of the blaze was not immediately known.
All the patients had been evacuated, he added.
“The victims came both from the hospital and the nursing home. Some died on their way to another hospital.”
Pictures showed survivors being brought out wrapped in blankets, and firefighters picking their way through the blackened shell of the building after the blaze was extinguished.
Around 200 people were in the Sejong Hospital building when the fire broke out, police said.
The fire came only a month after 29 people were killed in an inferno at a fitness club in the South Korean city of Jecheon — a disaster blamed on insufficient emergency exits, flammable finishing materials and illegally parked cars blocking access to emergency vehicles.