She was rushed to hospital but was sadly pronounced dead.
Witnesses at Gorleston beach in Norfolk report hearing an "enormous" bang and seeing the child, who had been playing on the inflatable, thrown six metres into the air at around 11am.
"The young female was seriously injured and in cardiac arrest on our arrival, and was conveyed to James Paget Hospital".
The East of England Ambulance Service Trust (EEAST) said it received more than a dozen calls to the incident and several people, including the RNLI, came to the aid of the girl. "Our thoughts are with the family at this time".
The owner of the play area the castle had been installed in wasn't on the scene at the time, but tells The Mirror it exploded "because of the heat".
Uniformed officers stood guard by the fenced off area, while others in the background continued to enjoy the seafront on the sunny afternoon. "Her family are obviously distressed, we can not imagine what they are going through and our specially trained officers are with them and will be with them for as long as they need them".
Earlier this year, a United Kingdom couple was found guilty of the gross negligence manslaughter of a girl who died when a bouncy castle she was in blew away with her trapped inside it.
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A joint investigation between police, the Health and Safety Executive (HSE) and the local council is under way.
Labour MP Thangam Debbonaire said "there should be a product recall until we know what [caused] yesterday's tragic death".
The Conservative MP has written to the House of Commons speaker requesting an urgent question on the matter on Monday.
"Clearly there needs to be a serious review into regulations around bouncy castles".
Two fairground workers were charged this year with her manslaughter.
Elizabeth Anne Collings, 68, and Claire Furmedge, 38, died after the Dreamspace artwork blew free in Chester-le-Street in July 2006.
The inquest heard there were no detailed discussions about how the structure would be fixed to the ground.