A factory worker died at the site after a pipe burst at the factory, owned by the Huangmailing Phosphorus Chemical Industry Group Company, in Hubei province at about 7:50 am (2350GMT Tuesday), Xinhua news agency said.
Three other workers were critically ill along with a fire-fighter, a 16-year-old girl and a pregnant woman in a nearby village in Dawu county, it said.
Schools and houses nearby were immediately evacuated while fire-fighters sprayed water into the air in shifts to clear the gas.
However, the water then flowed into the Huanhe river creating "super-high" levels of ammonia and nitrogen and threatening supplies downstream, Xinhua said.
The leak was shut off at 8:40 am and residents were returning home by the evening, although the smell of ammonia still lingered in the air.
Chemical leaks are a frequent occurrence in China as factories, some of them crumbling from years without maintenance, strain to meet the demands of a fast-paced economy.

Copyright AFP (Agence France-Presse), 2006