The defence ministry said six defence ministry employees and a developer were injured, while two "specialists" died of their wounds.
Rosatom said its staff were providing engineering and technical support for the "isotope power source" of the engine being tested.
The five were killed "while testing a liquid jet propulsion system", Rosatom, which oversees all Russian nuclear projects, said in a statement on its website.
At least five people were killed and three injured after a rocket exploded during tests at a military site in northern Russian Federation, the state nuclear energy company Rosatom said on Saturday.
Reuters quoted two us -based nuclear experts as saying they suspected the blast and radiation release occurred during the testing of a nuclear-powered cruise missile that President Vladimir Putin spoke of a year ago.
It is unlikely that a liquid-propellant rocket engine explosion alone would cause a rise in radiation levels, leading to speculation about what really happened.
The ministry said there was no release of radioactivity or any toxic substances, but the local administration in Severodvinsk about 30 kilometers (about 19 miles) east from Nyonoksa reported a brief increase in radiation levels. The BBC asked officials there why, and they said "because this incident comes under the authority of the defence ministry".
Those reports say an area near Nyonoksa is used for tests on weapons, including ballistic and cruise missiles that are used by the Russian navy.
He said this exceeded the permitted limit of 0.6 microsieverts, TASS reported.
Greenpeace Russia published a letter from officials at a Moscow nuclear research center who gave the same figure, but said higher radiation levels lasted for an hour. The officials said this did not present any significant risk to public health.
It added that the injured were being treated at a specialized medical center. Russian Federation maintains a veil of secrecy around its military installations in the region, near where its northern fleet, including nuclear submarines, are stationed.
"I think the radioactive contamination was fairly weak and the consequences will be [felt by] the people who were at the scene of the incident itself".
But the BBC reported that supplies of iodine - used to protect the thyroid from the effects of radiation - were running out in Severodvinsk and neighboring Arkhangelsk. "Within a matter of an hour all the iodine and iodine-containing drugs were sold out", pharmacist Yelena Varinskaya told AFP.
Moscow has a history of secrecy over accidents, most notably after a 1986 explosion at the Chernobyl nuclear power plant in the former Soviet republic of Ukraine, which is regarded as the worst nuclear mishap in history.