A New Zealand Defence Force spokesperson said the fire was contained last night after burning through about 150 hectares.
The scrub fire broke out following a routine ammunition disposal at about 11:20am yesterday.
Crews remained on site and continued to wet down hot spots and patrolled the area overnight to ensure there were no flare-ups.
There would be an investigation into how the fire started, the spokesperson said.
Tekapo resident George Empson was near the military base taking photos of wildlife when he heard one loud explosion, followed by a second.
"While I was leaving I had to open a gate to get the truck through ... when I looked up to the west that’s when I saw this massive smoke cloud."
Mr Empson could still see smoke coming from the site last night.
"From time to time they come to the base to explode old ammunition - whenever they’re live firing they put up a red flag, which was flying today.
"I guess it might have gotten away on them," he said.
