Both the health ministry and the Cuban presidency said that dozens had been injured in the blast but cited different numbers in the range of approximately 50 to 65 people.
The first four floors of the establishment, which was empty of guests while being renovated, were gutted in the late-morning blast that sent a cloud of dust and smoke billowing into the air.
The explosion tore off large parts of the facade, blew out windows and destroyed cars parked outside the hotel, which is known for having hosted celebrities such as Madonna, Beyonce, Mick Jagger and Rihanna.
The dome of a nearby Baptist church also collapsed.
Inside the hotel at the time were employees preparing for its post-refurbishment reopening, scheduled for next Tuesday.
President Miguel Diaz-Canel visited the site of the explosion and victims in hospital.
Miguel Hernan Estevez, director of the hospital Hermanos Almejeiras, said a two-year-old boy had undergone surgery for a fractured skull.
"So far we have no information that any foreigner was either injured or killed, but... this is preliminary information," added Tourism Minister Juan Carlos Garcia Granda.
Not a bomb
Roberto Calzadilla of state company Gaviota, which owns the hotel, said the explosion happened while a gas tank was being refilled.
"It was neither a bomb nor an attack, it was an unfortunate accident," said Diaz-Canel, who arrived at the scene an hour after the blast accompanied by the prime minister and National Assembly president.
Cuba was hit by a wave of anti-communist bombing attacks on hotels in 1997, in which an Italian tourist was killed and six people were injured.
Ambulances and fire trucks rushed to the scene Friday and police cordoned off the area, dispersing people who swarmed to the hotel near Havana's emblematic National Capitol Building that housed Congress prior to the Cuban revolution.
It is also next to a school, but no pupils were injured, according to the presidency.
Rogelio Garcia, a bicycle taxi driver who was passing by the hotel at the time of the blast recounted that "we felt a huge explosion and (saw) a cloud of dust... many people ran out."
"There was a terrible explosion and everything collapsed," said a woman, her face covered in dust, who declined to give her name.
According to the website of the Saratoga Hotel, it is an upmarket establishment with 96 rooms, two bars, two restaurants, a spa and gym.
It was built in 1880 to house shops and converted into a hotel in 1933.
"The United States sends heartfelt condolences to all of those affected by the tragic explosion this morning," said US State Department spokesman Ned Price on Twitter.
Mexico's Foreign Minister Marcelo Ebrard, meanwhile, said President Andres Manuel Lopez Obrador would not cancel a trip to Cuba planned for Sunday.
Condolences additionally poured in from Bolivia, EU foreign policy chief Josep Borrell and Nicolas Maduro, the president of close Cuban ally Venezuela, who said that "the Cuban people have the solidarity and support of all the peoples of the world" and especially Venezuelans.