Crews were called shortly before 2pm to the fire at the property in High St, near the intersection with Wickliffe St.
Fire and Emergency New Zealand Mosgiel station officer Mark Townsend said they arrived to find a fire ''no bigger than a waste-paper basket'' in the bathroom.
Crews used a single hose reel to quickly extinguish the flames, before a middle-aged woman in the property was treated at the scene by St John for smoke inhalation. She was then taken by ambulance to Dunedin Hospital.
Mr Townsend said the cause of the fire was yet to be determined and a fire investigator was at the scene yesterday.
A neighbour or passer-by was alerted to the fire by a smoke alarm near the bathroom, he said.
''All the smoke alarms were working, so that's a good thing.''
