Eyewitnesses said the victims were running around “like torches” at the “Backesfest” festival in the village of Freudenberg.
Five are reported to be in a life-threatening condition after the blast after they suffered severe burns.
Another had a heart attack during the explosion, German news agency Dpa reported. Aged between 31 and 75 years old, the victims were flown to hospital in a helicopter.
The accident is thought to have been caused after hot oil that had built up inside the pan reacted with a few raindrops, police said.
The water would have reacted with the intense heat of the fat, causing the water to pull burning fat droplets into the air in a fiery explosion.
However, investigators said it would still take several days to confirm the exact cause of the explosion.
Freudenberg's mayor Nicole Reschke told the Bild newspaper that it was an accident.
“This is a terrible misfortune for our little place,” she said.
Additional reporting Associated Press