By Agence France-Presse
The explosion occurred Friday morning and images posted on Chinese media shortly afterward showed bloodied victims nursing their injuries in the aftermath as a fire raged through the two-storey structure housing the restaurant.
The number of injured, 12 of whom were in serious condition, was heightened because the blast shattered the windows of nearby vehicles, including a bus, the government of Hangzhou's Xihu district said in a statement.
Reports said the fire was eventually contained after 12 fire trucks converged on the scene.
Hangzhou attracts millions of tourists each year, drawn by the scenic beauty of its temples and lakefront location.
Such explosions and similar accidents are common in China, where safety standards are lax.