The fire broke out about 5am on the third floor of a residential building in the Magaluf area, according to the Civil Guard, a Spanish law enforcement agency.
The cause of the fire was under investigation.
Residents tried unsuccessfully to put out the blaze, which spread to the rest of the building, especially toward the upper floors, it added.
The flames were extinguished about two hours later.
Four people remained hospitalised, local authorities said in a statement on their website.
About 20 residents were affected by the fire, it added.
Nearby hotels will provide temporary housing for affected residents.
One of the deceased was a 58-year-old Argentine citizen and the other was a woman who has not yet been identified, the Civil Guard said.
They were in two separate apartments.
The floor where the fire started was cordoned off, along with the levels directly above and below it, authorities said.
Magaluf, a popular beach and nightlife destination among young British and German tourists, is located on the coast of Calvià , 22km west of Palma de Mallorca, the capital of the Mediterranean archipelago.
Local authorities declared two days of mourning following the tragedy.
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