Emergency services were called to the house on Todman Street just after six o'clock on Sunday morning to find the two storey house fully engulfed, with the two neighbouring houses also catching alight.
Queensland Police confirmed that five brothers - aged 11, 10, four-year-old twins and a three year old - and their 34-year-old father who all lived at the home are unaccounted for.
The 28 year old woman was treated for smoke inhalation but was otherwise physically unharmed.
"This poor lady has lost her entire family," Queensland Police Superintendent Mat Kelly told reporters.
"She's terribly emotionally distressed at the moment, but doesn't have any actual injuries."
He said many in the small community would be affected by the fire, including emergency services on scene who knew the victims well.
"[It] is truly tragic as these young boys could have become men into the future," Mr Kelly said.
At least 30 fire personnel remained at the site on Sunday afternoon, as fire investigations began with drones sent overhead to assess the wreckage.
Queensland Fire and Emergency Services Assistant Commissioner John Cawcutt said the whole structure is very unstable, with embers still smouldering within the debris.
He said the two damaged properties either side of the destroyed house have now been checked, but the search for the missing people has been delayed due to the massive amount of debris from the collapsed roof.
"So that's one of the reasons we will be there for the next few days, as you start to lift the roof off the structure, then small fires often crop up again. There's still quite a lot of smoke, and there is fire still burning in parts of the property," he said.
"It's obviously one of the worst fires we've had for a long time," Mr Cawcutt said.
"When you get a tragedy like this, it touches many people."
Nine people were treated at the scene for smoke inhalation and minor injuries and two were taken to hospital in a stable condition.
Eight kilometre long Russell Island lies between the Queensland mainland and North Stradbroke Island, and has a population of about 3,700.
Queensland Police Commissioner Katarina Carroll thanked the "brave" first responders for their efforts on what could only be described as a devastating scene.
Queensland premier Annastacia Palaszczuk and others shared sympathies for those involved in the tragedy.
"My thoughts are with the whole Russell Island community at this very sad and tragic time," she tweeted.
"The early reports are heartbreaking and this tight-knit community will need our support in the days ahead," Queensland opposition leader David Crisafulli posted on social media.
Redland City Mayor Karen Williams described the fire as a dreadful tragedy.
"We are aware the impact of this incident will have deep and lasting ramifications," she said in a statement to AAP.
"The Southern Moreton Bay Islands are an isolated community and will need all our support as the community moves through and heals from this terrible situation."
She said the council is working closing with the responding agencies, including working with Community Champions and Red Cross to help find accommodation for a family from one of the homes.
Police are not treating the fire as suspicious at this stage.
Local authorities are in the process of setting up a fundraising account through the local registered charitable trust, The Redland Foundation.
