Tasmania Police said emergency services found the shed fully alight on Verdun Street in the Launceston suburb of Mowbray just after 1.30pm today.
“A toddler was found deceased, and another young child was taken to hospital with serious injuries,” police said.
“An adult was also taken to hospital with non-life threatening injuries.”
Police said the adult was a woman. The two children are not siblings but are known to each other, police said.
Tasmania Fire Service is investigating what caused the fire and a police report will be prepared for the coroner.
“Our thoughts and condolences are with everyone affected,” police said.