The explosion occurred when firefighters and police were already at the site responding to a fire, local media reports said.
No injuries were reported, said the Franco-German defence group KNDS. The plant is operated by KNDS Ammo Italy, which is a subsidiary of the group.
"It would have been a tragedy" if the blast had not happened during the summer holiday when the plant was closed, Colleferro mayor Giulio Calamita told reporters. He said efforts were underway to put out the last fires.
"The circumstances surrounding the incident are currently being investigated and assessed by the teams on site," KNDS said in a statement.
The plant makes medium- and large-calibre ammunition for land and naval defence systems, as well as solid propellants for aerospace launch vehicles, according to its website.
The company is among the contractors on European Defence Agency 155-mm ammunition framework agreements concluded in 2023, EU documents show.
Large plumes of smoke rose above the industrial site as emergency services worked, television footage showed.
