IS said its "fighters" carried out the attack, though Manila has repeatedly insisted the incident was not terror related.
The victims suffocated inside one of the main gambling venues of the upscale Resorts World Manila, while dozens of other people were injured in a panicked crush to escape, police said.
The gunman committed suicide by setting himself on fire about five hours after storming the casino with an M4 assault rifle and a bottle of petrol that he used to start the fire, police chief Ronald Dela Rosa said.
"This is not an act of terror. There is no element of violence, threat or intimidation that leads to terrorism," Dela Rosa told reporters.
But local police chief Tomas Apolinario told AFP that 37 people died from inhaling smoke from a fire that spread quickly because of flammable carpet on the gaming room floors.
Four of the victims were from Taiwan, according to the Taiwanese government.
He said the assailant, who appeared to be a foreigner because he spoke English and looked caucasian, was found just before dawn in a hotel room having committed suicide.
"He lay down on the bed, covered himself with a thick blanket, apparently poured petrol on the blanket and burned himself," Dela Rosa said.
Before the gunman had been killed and police had given any motive, there was an unconfirmed claim of responsibility from the Islamic State group. US President Donald Trump also branded it a "terrorist attack".
In a later statement posted on Telegram from one of IS's regular and authenticated accounts, the group went on to provide the gunman's "nom de guerre" and boasted of killing and injuring nearly 100 "Christians" during the rampage.
But Philippine officials were adamant it was not related to terrorism, and was the work of an individual.
"This particular situation in Manila is not related in any way to a terrorist attack," presidential spokesman Ernesto Abella told reporters.
He said the man then fired again at a stock room containing gambling chips and filled a backpack with chips worth 113 million pesos ($2.3 million).
The man left the room and went upstairs to the hotel section, but left the backpack, according to Dela Rosa.
The police chief said 18 of the 54 injured people were in hospital, while the others sustained only minor injuries.
"I was about to return to the second floor from my break when I saw people running. Some hotel guests said someone yelled 'ISIS'," Maricel Navaro, an employee of Resorts World, told DZMM radio, referring to another acronym for the Islamic State group.
"When we smelled smoke, we decided to go for the exit in the carpark. That's where we got out. Before we exited, we heard two gunshots and there was thick smoke on the ground floor," Navaro said.
Outside the complex, relatives of people trapped waited today to hear news of their loved ones.
"We are very worried about her. We haven't heard from her."
Their daughter, Hazel, died, authorities announced later.
President Rodrigo Duterte imposed martial law last week across the southern region of Mindanao to crush what he called a rising threat from IS.
He made the move shortly after militants went on a rampage through the southern city of Marawi, about 800 kilometres (500 miles) south of Manila.
Security forces are still battling the militants in Marawi, and the clashes there have left at least 175 people dead.
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