The fire ignited just after 6:30 a.m. in the 6600 block of South Keating. Investigators are looking into whether a natural gas leak led to the blast.
The couple inside what was once a brick split-level house in the West Lawn neighborhood managed to escaped. Witnesses say Ana Oyola, 46, suffered cuts and heat exhaustion, and her husband Pedro Sepulveda, 61, was severely burned.
"I saw the neighbor, the male neighbor of the house. I seen him walking around the side. He was on fire," said witness Rudy Venegas.
Venegas says the explosion knocked him out of bed before he rushed to rescue his elderly neighbor whose home was damaged by the blast.
A video captured by a resident's security system shows the explosion, one of the injured staggering from the rubble and then neighbors rushing to help.
"There was no visibility for a block or two. A lot of fire and a lot of smoke, a lot of wind pushing through the neighborhood," said Chicago Fire Department District Chief Peter VanDorpe.
Some on the block say they noticed the odor of natural gas just about the time the owner of the house that exploded started some construction work in his basement.
"It was bang after bang. Explosion after explosion. The fire was just coming up, up and up," said Melba Serrano, who was visiting the neighborhood.
"Look at the house, now the whole neighborhood. It's like a war zone," said Jason Rubio, the victim's son-in-law.
Next-door neighbor Doreetha Wheatley was awakened by the blast, then saw fire spread to her home. She, her husband, and four kids escaped the flames through a front window.
"It's unbelievable. We didn't know what happened. It was just this loud explosion. The smoke filled the entire block," Wheatley said.
Peoples Gas temporarily shut off service to the dozens of residences on the west side of Keating. As crews took gas readings at every home in that area, officials searched for what sparked the explosion.
"We don't know the cause or the source and we're working with all the agencies on site as we continue our investigation. It's going to be and ongoing investigation," said Bonnie Johnson, spokeswoman with Peoples Gas.
Fire department officials said one of the biggest challenges battling the blaze was Sunday's high winds, which kicked up smoke and make it difficult for firefighters to see early in the process.