Invercargill senior station officer Gordon Rodgers said the house was being renovated.
Contractors were removing the 6m chimney when its bottom became unstable and fell on one of them.
"[He] probably had 4m of chimney above where he was trapped.''
Three fire trucks were at the scene and firefighters had to smash down the chimney on the roof to free the man.
"The only option we had to free his hand was to take the chimney [apart] from top-down.''
Mr Rodgers said the chimney was very old and had not been used for some time.
Both the contractor and a woman who lived at the house remained "very calm'' throughout the rescue.
The middle-aged man was taken to Southland Hospital.
Part of the road was closed while emergency services attended.
No further details of his injuries were known.
