The children from the Israeli Bedouin town of Tel Sheva were hurried to the hospital in serious condition but died there shortly after.
No foul play was suspected.
Firefighters were continuing to tackle the blaze and 80 people have been evacuated, according to the rescue services.
Ram Ben Barak's Moshav Nahalal barn burned down overnight, and electrical malfunctions have been ruled out as the cause.
REPORTER'S NOTEBOOK: The shops along the stretch of the road, including dozens of groceries, butchers and car shops, were all shuttered, many sporting scorch marks from the violence overnight.
The storm that will reach Israel on Monday morning caused extensive preparations by the country's rescue services and municipalities.
The scenario was run by United Hatzalah, Fire and Rescue services, the Israeli Police, the municipality, Mayanei Hayeshua Medical Center and other emergency and security forces.