One of the dead, Xinhua reported, was a child living with incarcerated parents.
The melee began about 5 a.m. local time (0900 GMT), when the sound of gunfire was heard, and a huge fire fueled by exploded propane gas tanks injured inmates severely.
Clashes broke out between rival cell blocks for control of part of the overcrowded Palmasola prison, local media said.
The injured were taken to local hospitals, with many of them in serious condition, according to Bolivian daily "La Razon" (Spanish for "reason") quoting Santa Cruz Ombudsman Celso Parada.
The situation has been put under control, and bodies were taken for autopsies and identification, said police commander Jorge Aracena.
Police had earlier put the death toll at 15.
The Public Prosecutor's Office has begun an investigation into the riot.
Children who have their parents incarcerated and with no other relatives live intermingled with prisoners in the Palmasola Penitentiary Complex outside Santa Cruz, Bolivia's biggest city.
There are some 3,500 inmates in Palmasola prison, surpassing the prison's capacity.