Two firefighters and two members of the boy's family were injured. Five families were living in the building in the 1700-block of West Cullerton. All of the families are related.
The boy's 1-year-old sister and father were hospitalized Saturday night in serious to critical condition.
Earlier in the day, family members had hoped the 3-year-old boy was simply unaccounted for after the fire broke out, but then they got the devastating news.
The fire started on the second floor of a four-level building in the Heart of Chicago neighborhood and spread to a coach house.
A total of 20 relatives lived in the building.
Neighbors say the older children woke up the injured father, whom they say ran out of the home with a child in his arms.
"They jut pulled a man out, that I saw. He was laying here for a while. I couldn't tell if he was alive or anything. He was just laying there," said witness Emily Hamilton.
"It's a sad moment. I really am empowered now to go to the hospital and see them," cousin Wesley Rodriquez said.
Family members have identified the 3-year-old boy as Michael Cruz Jr. Fire officials say was found dead on the building's second floor.
"He was a good little kid, liked to do things with his family," Rodriguez said.
The boy's father is Michael Cruz Sr., 33, and his 1-year-old sister is Ciala Cruz, relatives say.
As family members desperately searched for the 3-year-old earlier Saturday evening. Before finding out her grandson had died, the boy's grandmother told ABC7 Chicago she hoped he was missing.
"I'm hearing different stories," grandmother Yolanda Lopez said. "Police are telling me they took the three of them. The fire chief is telling me that they're looking for my grandson. So, to be honest, I don't know. I wish I did know. They won't tell me anything."
Investigators say they do not know what caused the fire, which also injured two firefighters. One suffered a back injury, and the other injured a shoulder.
Several pets lived in the building, as well. Family members say at least two of the dogs did not survive.
The American Red Cross was helping the families that did not have a place to stay Saturday night.