Officials said firefighters responded to a fire in a residential building in the 700-block of East 91st Street shortly before 4:30 p.m.
Witnesses driving by saw smoke pouring through the windows and roof before firefighters even arrived.
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"My friend was throwing her shoes at the window because we didn't know if anyone was in the building or not," one witness said.
Firefighters said they found a 94-year-old man and a 2-year-old boy unconscious in a back bedroom.
"As soon as they located the child, firefighters brought the child out and began performing CPR," Chicago Deputy District Chief Bryan McKermitt said.
"He's a nice old man," said neighbor Lisa Hudson. "A very nice old man. He sits and watches the kids, he takes care of the kids. He's a very nice old man."
Both were taken to University of Chicago Hospital in critical condition, police said, but their conditions later changed to serious.
Fire investigators determined Thursday that an electrical malfunction in a space heater caused the blaze and categorized the fire as accidental.
Firefighters searched for a second child but no one else was found in the building, fire officials said.
"That's what the neighbors was telling me," Hudson said.
Ten people were displaced as a result of the fire.