The accident occurred Monday morning while filming an action sequence in Beijing, the crew said in a statement.
A small boat was set ablaze and collided with a larger boat as the filmmakers had intended, but the fire quickly raged out of control and engulfed both ships.
The person killed was a 23-year-old stuntman, the Beijing News reported, citing a local fire commander.
Woo, told of the news while promoting his film in Hong Kong, rushed back to Beijing, the crew said.
The crew "is deeply distraught and full of regret. They are making every effort to make arrangements for the deceased, his family and the injured crew members," the statement said.
It was the latest setback to Woo's massive production, which marks his return to Chinese-language film after a stint in Hollywood.
"Red Cliff," about a well-known battle in feudal-era China, has suffered casting changes and set problems since it started filming in April last year.
Actors Chow Yun-fat and former Cannes best actor winner Tony Leung Chiu-wai earlier pulled out, although Leung later returned to the cast.
Woo also wasn't able to shoot at China's largest river, the Yangtze, forcing him to create a similar backdrop with special effects. He didn't say why his team wasn't allowed to film there.
The budget for "Red Cliff" was more than $80 million -- huge by Chinese standards. Woo later said that figure was overstated, but didn't provide a new number.
The Chinese government views the movie, which is partly backed by state-run China Film Group, as an important showcase of Chinese history and wants it released before the Beijing Olympics. The Olympics start on Aug. 8.
Woo made hits such as "Broken Arrow," "Face/Off" and "Mission: Impossible 2."