Oakland Fire Chief Teresa Deloach Reed said most of those who died in the blaze that started about 11:30 pm (1300 IST) yesterday were thought to have died on the upper floor of the two-story warehouse known as "Oakland Ghostship.
"It must have been a very fast-moving fire," she told reporters.
It was not immediately known what sparked the inferno at the electronic dance music party attended by 50 to 100 people.
"We still have to do a more thorough search of the building and we don't know the potential number of other victims," Reed said.
The building, which housed artists including several who apparently lived there, had numerous partitions and a makeshift stairwell built from pallets.
Some of the structural changes made it extremely difficult for people to escape, Reed said.
"There wasn't a real entry or exit path," she said.
Firefighters were hampered in their efforts to put out the blaze by clutter.
"It was filled end to end with furniture, whatnot, collections," she said. "It was like a maze almost."
She added that it appeared no smoke detectors were activated in the building which also had no sprinkler system.
The fire raced through the structure quickly and got out of control at one point, forcing firefighters to pull back, reports said.
Friends and family of partygoers went to social media to try and find news about their loved ones, with some posting information on the event's Facebook page.
The rave party featured a little-known act called Golden Donna and several other performers. It was unclear if any of the DJs were among the dead.
"I literally felt my skin peeling and my lungs being suffocated by smoke," Bob Mule, a photographer who lives in the building, told the local KTVU station. "I couldn't get the fire extinguisher to work."
News footage showed orange flames shooting into the sky from the roof and flaring out of the large windows.
Sergeant J D Nelson of the Alameda County Sheriff's office said the coroner was preparing for 40 or more bodies, KTVU said.
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