Public broadcaster NHK said the cylinder was close to a drinks and snacks counter put in place for a grand fireworks festival which takes place each summer in Japan.
An explosion was heard around 7.25 pm local time and the counter and other objects were thrown in the air as a fire started and people fled, according to accounts and photographs posted on the Internet.
Sixty-one people were taken to hospital, Kyodo News reported, including two seriously injured with burns over their entire bodies.
Personal belongings were strewn across the area as investigators searched for clues.
