A fire started when assailants threw Molotov cocktails into a Cairo nightclub early Friday left 16 people dead, the Interior Ministry said in a statement.
The assault came after an argument when guards denied two customers entry into the club, according to a prosecutor's investigation cited by the state newspaper Al Ahram's website.
Club manager Hassan Ramadan said the 11 men and five women who died in the blaze were employees.
Police announced that two suspects were arrested and three others linked to the assault remained at large.
There were initial widespread fears just after the arson that it was the work of Islamist militants, who have carried out numerous attacks since the July 2013 ouster of President Mohamed Morsi, himself an Islamist. The wave of violence has raised questions about security forces' ability to safeguard public venues.
Friday's attack took place just a few hundred yards from a police station that is heavily guarded by a security checkpoint.
Egyptian police have also faced recent criticism over the alleged mistreatment of suspects; scores of deaths have been reported inside police stations over the last few months.
The El Nadeem Center for Rehabilitation of Victims of Violence, an activist group, reported that 13 detainees were killed at police stations across the country in November, with nine dying after torture, three after medical negligence and one by suicide. At least 42 cases of torture were reported.
During his visit to the Police Academy on Thursday, President Abdel Fattah Sisi called for an end to human rights violations by security officers.
This week, an Interior Ministry spokesman, Gen. Abu Bakr Abdul Karim, told local station ONTV that the reported abuses were isolated cases and not a sign of a more widespread problem.
Hassan is a special correspondent.