The centuries-old Parrandas festival in the central town of Remedios takes place every Dec. 24 and draws thousands of Cubans and some tourists.
"An unfortunate accident with fireworks occurred last night in Remedios," the government's Cubadebate internet news service reported.
Among the more than 20 seriously injured, according to Cubadebate, health authorities said some were in "very grave, some less grave, and others in critical and very critical condition."
All the injured appeared to be local residents, and the report did not mention that any tourists were hurt.
Remedios is located in Villa Clara province on the northern coast of the island.
Two of the town’s neighborhoods compete on Christmas Eve each year to put on the most spectacular show with floats and fireworks amidst a carnival atmosphere.
The cause of the explosion was under investigation, according to official media