The fire, near Coronet Forest, took hold after a burn-off jumped into a neighbouring property.
A Fire and Emergency New Zealand (Fenz) spokesman said an Arrowtown crew was called to the blaze about 3.45pm.
The fire was still burning last night.
Police had assisted with a road closure, but it had now reopened, the Fenz spokesman said.
An Otago Daily Times reporter at the scene earlier said five distinct lines of smoke were visible as the fire appeared to be travelling uphill.