The woman dropped her new device - worth USD 320 - in the open-pit toilet, reported Dahe, a web portal run by the Henan provincial government.
Her husband jumped in to try to locate the phone but was overcome by fumes and passed out, it said.
His mother went into the cesspit to try to help her son, but fainted herself, prompting the woman and then her father-in-law to enter in turn, the report said.
Villagers in Xinxiang, in central China, used ropes to retrieve the six people from the tank, which online images showed to be accessed via a metre-square brick-built hole.
The husband and mother-in-law both died, while the woman remained unconscious and the two neighbours were also ill, the report said.
"In five minutes, two lives have gone and my daughter-in-law is unconscious, leaving a half-paralysed elderly man and a one-year-old grandson," the husband's distraught uncle said, according to the web portal.
"How are we supposed to go on?"
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