The fire occurred at 2.30 pm at the hotel located in the central area of the holy city, Xinhua quoted Medina district authorities as saying in a statement.
"More than 700 people of different nationalities were staying at the hotel. Preliminary indications suggest that those killed died of suffocation," the statement added.
The blaze, however, was brought under control at around 5.00 pm, authorities added.
An investigation has been launched into the fire.
A nearby hotel was evacuated as a precaution as firefighters took on the blaze. Five Egyptians were among the dead in the blaze, Egyptian authorities said.
Medina is a major Muslim tourist destination. The city is the burial site of the Prophet Muhammad.