The late afternoon blast immediately killed two workmen and the 71-year-old wife of the owner of the Costa company in Barcellona Pozzo di Gotto, in Sicily’s Messina region.
The owner’s son was one of four people hurt and was taken to hospital in the island’s capital Palermo with serious injuries.
One of the injured, whose name was not given, later succumbed to their injuries in hospital.
Firefighters managed to extricate one employee who was inside the depot at the time of the explosion, but were still searching for one of his colleagues who was reported missing.
The local prosecutor’s office opened an enquiry into the disaster.
Staff were preparing for New Year celebrations comprising traditional firework displays across the south of Italy designed to chase away evil spirits.