One hundred firefighters responded to the scene in the 400 block of East 96th Street just before 2 p.m.
Authorities say the fire happened in the basement of a two-story building.
One of the two people rescued from the scene has been pronounced dead. The second person is in serious condition but is expected to survive.
Jason Watts, a good Samaritan, said he smelled smoke and automatically started working to get everyone out.
"We went through the back, kicked the door in and it was too much smoke," Watts said. "We had to get out of there. But like, you know, one causality. Probably in there. That's my friend Kirk. It hurt me to the heart. I live right next door. I was there. First hand, everything. Smelled smoke, we called 911, they're here. And you know how it goes. Kirk is in there though."
FDNY Deputy Chief Michael Grogan said the victim didn't make it out of the cellar area and it was a very smoky fire.
He said there were some items on the stairs as firefighters attempted to enter the home and reminded the public to not clutter their staircases.
The cause of the fire is not yet known.