The children, aged between nine and 14, were sleeping with their families on the upper floor of a building on the premises when the blaze took hold in the early hours, said Sath Nady, chief of police in northwestern Siem Reap province.
"Eight people from two families died in the fire. They could not find their way out," he told AFP, adding that two others were seriously injured.
The inferno, which raged for some two hours, was apparently caused by an electrical fault, Sath Nady said.
More than 100 market stalls selling souvenirs were destroyed by the flames, he added.
The night market, a popular attraction for visitors to the small provincial town, was closed when the fire broke out.
Siem Reap is the gateway to the country's main tourist site, the ancient temple complex of Angkor, a UNESCO World Heritage site.
Around two million foreign tourists visit Angkor national park each year, according to figures from the Cambodian tourism ministry.