The blaze, which peaked at 400m long and 100m wide and torched wilding pines to spectacular effect, was "under control" last night and was expected to be declared officially out by rural firefighters this morning.
The fire was believed to have ignited on lakeside private land above the luxury Matakauri Lodge, on a hill called Bobs Knob.
The hill is located between Seven Mile and Wilson Bay, off the Glenorchy-Queenstown Rd, about 7km from Queenstown.
Multi-agency personnel stood down after almost 12 hours of battling the flames at ground level and with up to seven helicopters dropping water.
A resident raised the alarm at about 6am.
About 25 residents of Alpine Tce, using their own vehicles, and the vacant Matakauri Lodge were cleared to evacuate at 7am.
Householders in Moke Lake, Wilson Bay and Closeburn were alerted and concern was expressed from Corsican Dr residents.
All were allowed to return by 3pm.
No-one reported injury and no property was damaged.
However, Doc area manager and incident controller Greg Lind said yesterday the potential for loss of property was "very high".
The fire reached within 3m of the nearest home in the early hours, before firefighters tackled it, and ash embers fell on houses.
About 25 Doc rural firefighters were at the fire front with pumps and hand tools.
Six or seven Doc staff manned the operations command at Seven Mile car park and seven Doc staff worked in the control centre in Queenstown.
At least eight Queenstown Lakes District Council personnel in a fire party and a crew from vegetation control contractors Asplundh were sent, with one council representative in the control centre.
Two crews and appliances attended from Queenstown Volunteer Fire Brigade and police were present.
There was speculation the land where the fire originated was owned by Lord of the Rings film-maker Sir Peter Jackson, but Mr Lind could not confirm ownership yesterday.
Sir Peter's land was "either on it, or right adjacent to" where the fire started, Mr Lind said.
A spokesman at Sir Peter's Wingnut Films declined to confirm or comment.
A power cut occurred at Bobs Cove, near Queenstown, yesterday, at 3.15am.
Delta spokesman Nigel Howard said staff saw fire appliances arrive as a fire spread at 6.09am.
Mr Howard said 442 consumers were without power until 6.11am and a further seven consumer were restored by 12.21pm.
One consumer was without power last night.
"Initial investigations have indicated the possibility of third party damage as this line was damaged, and repaired, last Easter, the damage being caused by private party tree felling," Mr Howard said.
"Investigations are continuing."
