Around 60 firefighters are tackling a blaze at the Koko club in Camden, north London.
The London Fire Brigade were called at 8.56pm on Monday to the venue and eight fire engines are at the scene.
The force said that 30% of the roof of the nightclub is alight as firefighters attempt to save the rest of the building.
Pictures show the former theatre with large flames at the top of the building, which is near Mornington Crescent station.
It is covered in scaffolding as part of an ongoing renovation of the venue, which has hosted acts including Madonna, Ed Sheeran and Prince.
Leader of Camden Council Georgia Gould said: "Heartbreaking watching the Camden Palace / Koko up in flames this evening, a building that holds so many memories and means so much to us in Camden."
MP for Holborn and St Pancras Sir Keir Starmer echoed Ms Gould's statement on Twitter.
Sir Keir said: "Awful news in Camden tonight. Incredible response from our firefighters. As Georgina Gould says, we owe them so much."
Formerly known as the Camden Palace and the Camden Hippodrome, the venue had been closed for refurbishment and was covered in scaffolding at the time of the fire.
It was set to re-open in spring 2020 after a "major state-of-the-art" refurbishment, after the purchase of two adjacent buildings.