Emergency services were called to the home on Darwin Road in Campbelltown about 2.15pm and treated the six-week-old boy for burns to up to 90 per cent of his body.
He was taken to Campbelltown Hospital in a critical condition but later died.
A second child was assessed for smoke inhalation but did not require further treatment.
NSW Ambulance Chief Superintendent Mark Gibbs said it was a confronting scene for paramedics.
“The baby had sustained burns to between 80 and 90 per cent of its body,” Gibbs said.
“Paramedics provided treatment for the burns, alongside a specialist medical team from the Toll Ambulance Rescue helicopter before the baby was taken to hospital by road.
“Any incident involving a child, particularly a very young baby, is heartbreaking, but I’d like to commend our crews for doing an exemplary job under very difficult circumstances.”