Firefighters rushed to Barnacles Backpackers in Bowen, about 50 kilometres north-west of Airlie Beach, about 3.30am on Wednesday.
Video showed flames roaring high into the air as officers tried to control the blaze from the ground.
They managed to extinguish the blaze within about an hour and a crime scene was declared.
It was initially thought all eight people inside at the time made it out without injury but last night police said a further search of the property found a body.
Forensic examination has begun to try to identify the dead person.
Police called for witnesses and anyone with dashcam or CCTV footage of the area to come forward.
Anyone with information can contact Crime Stoppers on 1800 333 000.
