Pictures on state media showed the blackened multi-storey building in western Hanoi, largely destroyed by flames, and piles of twisted metal strewn nearby.
Police said they received reports of a fire at 11:00 pm (1600 GMT) “with many people trapped inside”.
Rescue workers rushed to the scene and managed to bring out seven people alive, two of whom were rushed to hospital. Eleven people were found dead, they said.
“The police suspect that the cafe was (deliberately) burned down and … have arrested the perpetrator,” Hanoi police said in a statement.
Witnesses told state media the fire was so large that no one dared to attempt to rescue those trapped inside.
Nguyen Minh Hung, who was nearby at the time, told Dan Tri newspaper: “We were shouting for the victims trapped, but we heard no ask for help from inside the building.”
bur-aph/cwl
© Agence France-Presse