Mount Rokatenda, on the island of Palue some 1,250 miles east of Jakarta, spewed ash and rocks hundreds of metres into the air.
Disaster officials said hot ash covered a nearby beach, leaving three adults and two children dead.
The volcano had been rumbling since late last year, forcing the evacuation of hundreds of people.
A spokesman from Indonesia’s volcanology agency said it was not clear what the victims had been doing inside an exclusion zone.
Palue is about 2.5 miles wide, and lies a short distance off the north coast of Flores, the main island in Nusa Tenggara province.
Much of the Indonesian archipelago lays on the Pacific “ring of fire”, an area prone to volcanic eruptions and earthquakes.
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