Northern fire communications shift manager Dallas Ramsay said fire crews were called to the large fire, which engulfed about 100m by 100m of scrub, near Te Ngae Rd, close to the State Highway 30 turn off about 3.30pm.
The fire was now under control.
She said about 40 fire fighters, along with several fire trucks and a helicopter had put out the blaze.
A witness said the fire came within about 100m to the edge of his property.
"The flames were about 10m high and the smoke was even higher. It was huge."
Ms Ramsay said three buildings in the area were at risk of catching fire and it is likely they have been evacuated as a precaution.
There were no reported injuries but an ambulance was at the scene for precaution.
A Rotorua Daily Post photographer at the scene said the fire looked like it got fairly close to the surrounding houses.
A helicopter with a monsoon bucket was working to get the fire under control, he said.