The blaze started around 2 AM inside Durga Cinema hall at Dowleswaram village due to a short circuit, police said.
Soon the flames spread and engulfed the adjoining hutment, where the victims were fast asleep.
T Muthayala Rao's family comprising wife T Murthamma (40), T Sri Lakshmi (20), T Vasantha (23) Srivani (4) and Greshmi (3) were killed in the fire, while he escaped death.
The fire was doused in four hours after extinguishers were pressed into service.
Dowleswaram police have registered a case and investigation is on.