Four fire appliances were at the blaze on Ythan St at 4.40pm and smoke was coming from the roof of the house.
No flames were visible, but the windows at the property had been blackened by smoke and fire.
Firefighters, some wearing breathing apparatus, battled the blaze, but it appeared to be under control.
A neighbour at the scene said it appeared the fire started in the garage before making its way through the house.
Fire and Emergency New Zealand communications shift supervisor Ian Littlejohn said emergency services received a number of calls from the public about the fire.
Initially two crews - from Invercargill and Kingswell - responded, and when they found the house well ablaze two other crews from Invercargill were called to the scene along with a support vehicle, he said.
The fire was now largely out but crews remained on the scene to check all of the hotspots had been extinguished, he said.
There was no obvious cause, and a specialist fire investigator had been brought in. Police were also on the scene directing traffic.
An ambulance attended as a precaution, but there were no reports of injuries. Mr Littlejohn was unable to give any information about the residents of the house.
The fire comes as firefighters in the South have been kept busy by a spate of fires across the region, including a house fire at a rural property in Invercargill on Tuesday.
On Tuesday a man was found dead at an Invercargill home after a house fire and there was a similar incident in Dunedin earlier this month where a man was found dead in Mosgiel.
