The thick plume of smoke that engulfed Circular Quay was visible from across Sydney Harbour on Tuesday morning as firefighters evacuated the area and controlled the blaze.
"Fire crews. found a building that was under demolition in a work site that had a fire that was progressing from the lower levels and up the outside of the building", Superintendent Andrew Ticehurst from Fire and Rescue NSW said.
Pitt Street is closed southbound between Alfred and Bridge Sts.
A 200-metre exclusion zone was set up, leaving thousands of office workers watching the firefighting efforts outside the barriers.
Multiple fire crews are at the scene, with video footage showing the outside scaffolding of the Pitt Street building well alight. There are seven crews at present on scene to fight the fire.
The fire is at the site of the old Gold Fields House building.
About 15 fire crews attended the fire and attacked it from the outside before heading inside to see if the flames spread internally.
Thirteen people were treated for minor smoke inhalation, a NSW Ambulance spokeswoman said.
The fire started on the eastern side of the multi-level work site, with flames quickly encasing the entire side of the building as people heading to work watched from the streets below.
"There were two workmen trying to put the flames out from the roof with a small hose", she said.
Sydney Trains earlier said trains were no longer stopping at Circular Quay station, but they have since resumed.