Gikomba is one of the largest open-air markets in the city and fires there are frequent, leading to speculation about possible arson attacks, The Standard newspaper says.
However, the cause of the current fire is not yet known.
The St John Ambulance service said the fire broke out at 02:30 local time (23:30 GMT on Wednesday) and spread to apartments and market stalls before being contained after about 90 minutes.
Some of the victims were burned while others inhaled poisonous fumes as they tried to salvage their property.Hospital officials said there were four children among the dead.
The injured have been rushed to different hospitals across the city.
One woman told the BBC she is still searching for her sister. "When I got to the scene, the fire had already spread to her house," said Millicent Achieng.
"She told me she was inside her flat and there was so much smoke that she couldn't move. Her child was with her."
Ms Achieng said she pleaded with the security guard to open the gate to building, but he refused - saying he had been instructed by the landlord to lock it to "keep looters out".
Ms Achieng said she tried to reach her sister unsuccessfully by phone several more times.
"Now calls aren't going through," she said. "At dawn I asked my brother to go look for her in the hospitals but he couldn't find her. We don't know if my sister is among those who were burned beyond recognition."The market is well known for the sale of second-hand clothes, shoes and vegetables, and also has timber yards which were damaged in the blaze.The blaze is believed to have broken out in one of the timber yards.
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