Witnesses heard shouting as flames ripped through the home on Bushbury Lane in Oxley at around 2am on Monday, before three fire crews got the blaze under control and rescue the two men.
One man died at the scene while a second man died from his injuries in hospital.
The house was left a blackened mess, with the downstairs rooms completely burned out, and an acrid smell of burning was still in the air around Bushbury Lane hours later.
Forensic officers were at the scene later in the morning to get photos, while a crew from Western Power Distribution also attended to shut off the power.
Residents living in the neighbouring terraced houses were still taking in the magnitude of the events of the night before, with many still in shock and disbelief at what had happened.
One, who didn't want to be named, said he heard desperate shouting at around 2am and looked out of his back window to see smoke billowing out of a window several doors down.
He said: "We heard a distressed noise and someone shouting 'Come on, get out, there's a fire' at around 2am, and then I saw the amount of smoke and realised how bad the fire was.
"The man next door had already got his family of six out and we went round the back to try and get the doors and windows open, but they were locked and the fire was too fierce for us to do much before the emergency services arrived."
The resident described seeing firefighters having to sit in his front yard with bottles of water to recover after going into the house to rescue the two men, due to the amount of smoke from the fire.
He said he saw the two men being carried out of the house and having CPR administered.
He said: "I saw them having CPR done to them, but I was saddened to find out that one of them had already died, while the other was taken to hospital and I don't know how he is at the moment.
"I've known them since I moved in here about 12 years ago and I'd seen them just that evening walking up the street from the shop, so I'm just shocked at what has happened to them."
Another resident, who didn't want to be named, said she had heard shouting around 2am, but had initially dismissed it as a fight going on.
She said: "It sounded initially like it was a big fight going on and I was hoping they would just get it over with, but then people started banging on my door and it was then that I smelt the smoke.
"I called 999 around 2am and then, after that, it's just a mess of rigs and noise and it's all very upsetting as it's not something you expect to happen.
"It's very raw right now to think that one of them is dead as you just think that's someone's baby who has just gone."
A resident living a few doors up from the house, who didn't want to be named, said he had been woken up by the sound of a fire engine and was surprised to see the smoke.
He said: "I usually don't pay much attention to the noise on this road as there's so much all the time, but I heard a fire engine sound and looked out my window to see the smoke coming down the road.
"I don't know how I feel at the moment as I'm trying to take in what has happened and the scale of it.
"I feel sorry for them as they were such a lovely couple and it's shocking to hear what happened to them."
West Midlands Ambulance Service had sent three ambulances, three paramedic officers, Hazardous Area Response Team (HART) paramedics and a MERIT Trauma doctor and critical care paramedic to the scene.
A spokeswoman said: "The two men were in a critical condition and ambulance crews immediately commenced advanced treatment on scene.
"One man was conveyed on blue lights to New Cross Hospital in a serious condition for further emergency care.
"Sadly, despite the best efforts of ambulance staff and fire colleagues, nothing could be done to save the second man and he was confirmed dead on scene."
A spokeswoman for Western Power Distribution said: "It is normal procedure for the fire service to call us and other utility services when there is a fire at a property."
A spokesman for West Midlands Fire Service said: "West Midlands Fire Service were called to a house fire on Bushbury Lane in Wolverhampton at 2.03am on Monday 25 October.
"Crews from Bilston, Dudley, Fallings Park and Wolverhampton attended and used hose reel jets and breathing apparatus to tackle the fire and search the premises.
"Two occupants were rescued from the premises, and very sadly one of the occupants died at the scene.
"Our thoughts and condolences are with their family at this time.
"One other person was taken to hospital in critical condition.
"Investigations at the premises are ongoing with our colleagues at West Midlands Police.
"Anyone with any information can contact West Midlands Police via Live Chat at west-midlands.police.uk or by calling 101. Please quote log number 187 of 25 October."