Fire swept through the 26-story MGM Grand Hotel and casino in Las Vegas yesterday, killing at least 85 people and injuring more than 500 in the second worst hotel fire in U.S. history.

Fire officials said that guests were trapped in the upper floors and that the death toll could go higher. Firefighters making a floor-by-floor search of the 2,300-room hotel found many guests dead in their rooms, trapped by suffocating smoke that prevented their escape.

"I opened the door, and people were shouting, 'What should we do?'" Keith A. Beverton of Woodland Hills, Calif., told the Associated Press. "It was death, absolute death in there. I closed the door, and the air in my room was so thick I was having trouble breathing."

Some of the dead were found in an elevator, others in the casino. Two were killed trying to jump to safety. Hundreds were evacuated from the hotel's tower roof by a helicopter shuttle service that included seven giant aircraft from nearby Nellis Air Force Base.

The fire broke out at 7:15 a.m., apparently in an exhaust fan in the kitchen of a ground-floor delicatessen, sending dense clouds of smoke through stairwells and elevator shafts throughout the hotel. Flames destroyed the 424-foot-long first-floor casino, forcing many early-morning gamblers into the streets and burning millions of dollars worth of "markers," the credit slips used to keep track of guests' debts.

Although the blaze was brought under control in two hours, it was nonetheless termed "the worst hotel fire we've ever had in Las Vegas" by Clark County fire Capt. Ralph Dinsman.

"I saw bodies littering the halls," said acrobat Frank D'Agostino. "The smoke was black and bad." He said he made seven or eight trips as high as the 23rd floor trying to bring hotel guests to safety. "Then, the smoke got to me, too, and I woke up in Desert Springs Hospital."

As many as eight helicopters at once swarmed around the burning hotel. About 30 fire trucks and at least that many ambulances surrounded the hotel with their lights flashing as guests on balconies outside their rooms shouted for help.

Ambulance paramedic David Skoff said he saw three people jump from the building, two to their deaths.

"None of the people we saw were burned," a nurse at one hospital said, "but it was still pretty gruesome. They can't breathe, and they're all blue. One had seizures. Most were hysterical, and you would be, too. All they know is that all their possessions and money are gone."

Glass from broken windows rained down on the sidewalk, showering shards on firemen and spectators alike. At least six persons were arrested for interfering with firemen and disobeying police. One witness said the burned-out hulk of a car under the hotel marquee made it all look "like a war zone."

The once-dramatic entryway to the hotel, a white building faced with a golden "Grand Portal" canopy, was blackened by the flames. Gamblers left the tables of the ground-floor casino to find safety. Said one dealer: "Some didn't want to leave, but there was no choice." State Gaming Control Board agents arrived to guard the unburned money.

Eyewitness accounts by hotel guests indicated they had little or no warning that fire had broken out. Investigators said it appeared that the fire alarm amplifiers in the basement were destroyed in the blaze.

Mr. and Mrs. James Mackey of Bear Lake, Mich., said they were sleeping in their room on the 22nd floor when smoke poured into the hall outside. "When we woke up, we couldn't even see across the hall," Mackey said. "We got news of the fire by turning on the radio. We put matresses against the wall and kept stuffing towels under the doors to keep the smoke out. We put a note on the door and prayed a lot."

Phil and Bob Lee Loparo of Cleveland said they raced back inside their 15th-floor room after touching a searing hot stairway door. They put soaked towels over their heads and faces and lay on the floor of their room until firemen rescued them.

Fire ladders reached only to the ninth floor. Police in circling helicopters used bullhorns urging people not to jump but at least three did.

"There were a couple of people trying to get down a rope," said Don Sellers, a bellman from the adjacent Barbary Coast Hotel. "First one of them tried and he slid down about one floor and let go. A few minutes later, the other one tried but he fell, too." The fate of the two men was unknown.

"The unusual feature of this fire was that the smoke did not come into the hotel rooms through the windows," County Coroner Dr. Otto Ravenholt said. "The people broke their windows trying to get fresh air and the smoke came in from below."

The death toll yesterday was exceeded only by the 119 deaths in a fire at the Winecoff Hotel in Atlanta in 1946.

The MGM Grand was one of the most opulent and profitable hotels in America. When the $120 million hotel was opened in 1973, it was the largest resort hotel in the world. Its luxury reminded people of the grand hotels of Old Europe, with guest quarters called "petite suites" instead of rooms.

The main casino boasted 1,000 slot machines, a 200-seat keno lounge, 40 blackjack tables, 14 carp tables and three roulette wheels. Two huge theater-restaurants seating 2,000 people, a 2,000-seat sports arena and eight other restaurants and lounges were scattered through the hotel. Its name came from the 1932 film hit "Grand Hotel," produced by its owner, Metro-Goldwyn-Mayer.

One thing the hotel did not have was a complete sprinkler system. There were automatic sprinklers only in the basement, on part of the first floor and on the 26th floor. Clark County Fire Chief Roy Parrish said these were the only areas of the hotel not under 24-hour-a-day supervision, and the fire code does not require sprinklers in areas patroled 24 hours a day.

The Las Vegas Convention Center was converted into a massive aid station yesterday for hotel guests routed by the fire, and radio stations broadcast appeals for German, Japanese and Spanish-speaking people to help with language difficulties.

Evangelist Billy Graham, in Las Vegas for a four-day crusade, walked among the dazed and tearful tourists, comforting them. Said Graham: "I have never seen a community respond to anything like Las Vegas has responded to this tragedy."