Hunters were operating high-powered rifles on the island in the hours leading up to the fire and police say "strong evidence'' at the scene indicates the fire was started by a spark from a firearm.
Constable Craig Bennett, of Kurow, said hunters on the island at the time of the fire were forced to abandon their campsite because of the speed the fire spread.
They made the 111 call.
The hunters had adhered to good shooting practices, making sure they were firing towards the ground, but conditions were extremely dry in the Waitaki Valley.
"It shows how dry our conditions are and that the smallest of sparks can have a very significant impact,'' Const Bennett said.
Two helicopters and three rural fire crews battled the blaze until dark on Saturday and the site was monitored overnight by deputy principal rural officer Kerry O'Neill.
The fire had covered about 25ha on Saturday, but gale-force westerlies overnight spread it quickly.
When crews returned, flames were reportedly higher than the largest trees on the island - "a good 12m into the air'', Const Bennett said.
Ten firefighters and one helicopter remained at the scene on Sunday and by 4pm, they had contained the fire to 72ha.
It was "just lucky'' the fire was contained to the island, Const Bennett said.
"If that was over the other side of the river bed and into paddocks, with that wind, then you're looking at a major incident, very similar to Saddle Hill.''
The 100ha island attracted campers and was a popular fishing and hunting area accessible only by river crossing.
Criminal charges were unlikely because there did not appear to be any carelessness in the hunters' use of the high-powered firearm, Const Bennett said.
"But there certainly may be recovery sought by the Fire Service,'' he said.
The fire was an indication of how dry the Central Otago and Waitaki districts were.
"Police are warning hunters to be aware of their use of high-powered firearms and rifles, given the extremely dry conditions,'' he said.
"You've got to keep an eye on your firearms and how you're using them and make sure there is no chance of even a stone spark.''
The Waitaki River island fire was the second in the district at the weekend.
Six fire crews from Twizel, Omarama and Otematata were called to a grass fire in Lake Ohau Rd on Saturday afternoon.
The fire burnt about 7ha of vegetation and had been sparked by a mower blade hitting a rock at Ohau Downs Station.
"That's how dry and how dangerous the conditions are at the moment,'' Const Bennett said.
