Flames tore through the house on Tame Road, Tipton, at around 8.10pm last night.
A man in his 50s and a woman in her 30s were rescued from the property and medics attempted to save his life at the scene before he was confirmed dead a short time later.
The woman was also treated at the scene and taken to hospital, where she remains this morning.
The terraced house sustained extensive damage in the blaze, with images from the scene showing an upstairs window blackened. An investigation into the cause of the fire is now under way.
West Midlands Police has confirmed an 18-year-old woman - believed to be known to the man and woman who were in the house - has been arrested on suspicion of arson with intent to endanger life. A pet dog was also killed in the blaze.
Superintendent Phil Asquith, from Sandwell Police, said: "Our thoughts are with the family and friends of the man who sadly lost his life.
"Two of our officers were passing through the area at the time and were first on the scene. They bravely went into the address but the intensity of the fire forced them back."
A West Midlands Ambulance Service spokeswoman said: “On arrival at the scene, crews found two occupants who had been rescued from the property by fire colleagues and were being given CPR.
“One occupant, a man, was in a critical condition. The team of ambulance staff immediately commenced advanced life support on scene but sadly, despite the best efforts of the emergency services team, nothing could be done to save the man and he was confirmed deceased a short time later.
“The second occupant, a woman, received advanced treatment by ambulance staff who were able to stabilise her condition before she was conveyed on blue lights to Russells Hall Hospital for further emergency care.”
The blaze has shocked neighbours.
Marzena Siuzdak, 51, who also lives in Tame Road, said she smelt smoke at around 8pm.
"I was saying to my husband close the garden door. I thought maybe someone was having a barbecue but he said no there's a fire," she told the Express & Star.
"This is shocking for me, it has never been like this before."
One man, who wished to remain anonymous, said: "I was standing here [by the pavement opposite the house], at the time there was no smoke.
"There was a police car approaching. There were three guys running towards the house. I saw a small amount of commotion."
He said he heard "windows breaking" and shouting, adding: "It was shocking to see, definitely."
A number of police vehicles remained at the scene on Wednesday, along with a blue police tent that was set-up on the front garden.
Gas engineers were also present, with orange bollards placed on pavements around the property that was barricaded off.
West Midlands Fire Service [WMFS] said it recieved numerous calls to the house fire at 8.10pm, with 999 callers reporting "people still inside the property".
Around thirty firefighters, on six fire engines, were sent to the scene, with the first one arriving within four minutes.
A spokesman for WMFS said: "Crews were confronted with a significant fire in the first floor bedroom of a mid-terraced house.
"Four firefighters wearing breathing apparatus were deployed into the property, to tackle the fire and search for any residents.
"One man, one woman and a dog were rescued from inside, within minutes of the fire crews attending.
"The woman was conveyed to Russells Hall hospital by paramedics.
"CPR was given to the man and the dog by firefighters and paramedics, but both the man and dog were sadly pronounced dead at the scene.
"We would like to offer our condolences to the family and friends of those affected by this tragic incident.
"Our fire investigators will be working closely with colleagues from West Midlands Police."