Local media reports said the suspected attackers was carrying what appeared to be an Islamist black flag at the site in Saint-Quentin-Fallavier.
The murdered man's head was found attacked to the factory's wire mesh fence near his corpse, police said.
According to Le Parisien newspaper, the man's face was covered in Arabic writing.
One of the suspects, a man in his 30s with known extremist links, was arrested.
A "loud explosion" was heard at Air Products, a gas products firm, at 9.50am local time (8.50 BST) Le Dauphine Libre reported.
Two men in a car had forced their way into the compound and after driving at speed within the factory grounds, they rammed a pile of gas cylinders, causing a small explosion.
Several other people were hurt in the attack, although the extent of their injuries is not known.
The French interior minister, Bernard Cazeneuve, was on his way to the town in Isere, near Grenoble this morning.
First indications suggested that neither of the victims was an employee of the factory. It was not immediately clear if they were attackers or whether the head had had been attached to the fence deliberately.