Seventeen people were killed in a fire that tore through a packed karaoke bar on Indonesia's Sulawesi island, and 71 others were taken to hospital for smoke inhalation.

Witnesses told authorities the fire started at around 1am on the second floor of the three-storey building as hundreds of people were singing in private rooms at the Inul Vizta Karaoke club in Manado, the capital of North Sulawesi province.

Workers were unable to put out the fire with extinguishers. It took firefighters several hours to bring the blaze under control.

"We are still investigating the cause of fire," a police spokesman said, adding that a preliminary investigation indicated a short circuit.

He said some panicked people smashed windows and fled into the street, while many others were stuck in black smoke billowing from the second floor as there was only one access door to the building.

All 17 people who died were Indonesians. Most died from smoke inhalation rather than burns.