Drivers have been warned to expect traffic delays in Melbourne after a massive building fire forced the closure of a main thoroughfare.

Chapel Street, in South Yarra, is expected to remain closed until mid-morning on Thursday due to structural issues with the fire-affected Lux Nightclub.

The two-storey building on Chapel Street, South Yarra, went up in flames just before 2am Thursday.

Firefighters battled the blaze that engulfed the top floor for about two hours.

Multiple calls to triple-zero prompted a major firefighter response.

About 50 firefighters and 15 firetrucks were on scene tackling the flames on the second floor.

The inferno in the 25 metre by 45 metre building sent smoke billowing into the night sky, prompting a community warning for smoke in the area

The scene was declared under control at 3.48am.

Chapel Street was closed in both directions while the firefighting operation was underway and remained closed on Thursday morning.

Firefighters said the premises was unoccupied at the time.

Sunrise reports there were unconfirmed sightings of men in balaclavas on top of the building before the fire took hold.

Fire Rescue Victoria said it was treating the blaze as suspicious.