Praia Grande, on the Atlantic coast, is a popular destination for hot-air ballooning in Brazil.
The survivors were being treated in area hospitals, firefighters said.
An investigation was launched to determine the cause of the accident.
“I want to express my solidarity with the families of the victims,” Brazilian President Luiz Inacio Lula da Silva said in a statement.
The pilot told officials that the fire was sparked by a blowtorch in the basket, Tiago Luiz Lemos, a police official in Praia Grande, told local media.
