Fire officials told local media that one victim was a 67-year-old woman.
Most of the 50 structures in Fairdale were flattened and all were damaged, the fire department said.
The National Weather Service has deployed three damage surveys teams across northern Illinois amid reports that at least two tornadoes struck.
The teams will work to determine the magnitude of the tornadoes, and their precise paths overland.
Roger Scott, Sheriff off DeKalb County, said that approximately 15 to 20 homes in Fairdale were completely destroyed.
In nearby Rochelle, authorities have said 30 homes are destroyed or uninhabitable.
One resident of Fairdale told the Associated Press that his tiny community of about 150 people now looks "like a landfill" this morning.
Much of the damage was inaccessible to rescue crew on Thursday night due to wreckage blocking roads.
By Friday crews have continuing searching the collapsed structures for additional victims.
Authorities say that threat of tornados has dissipated Friday, although there is still a chance of rain and high winds.
A small family owned zoo was damaged by storm winds in Belvidere, Illinois. Three animals were killed and their shelters destroyed.
Sommerfield Zoo's owner, Tammy Anderson, told local media that after the winds died down she emerged from her basement to view find the zoo severely damaged and the animals gone.
"It was really hard to find the ones that were loose because it was so dark," she told the Chicago Tribune.
An online campaign has already raised over $40,000 (Â£27,000) from the public to rebuild the animal enclosures and fences.
A severe tornado has killed two people and injured a dozen more in a small town in northern Illinois in the US overnight Thursday.