Guests and staff were evacuated from the luxury Mandarin Oriental Hotel in Knightsbridge as 120 firefighters tackled a large fire on the roof.
London Fire Brigade said 20 engines and 120 firefighters and officers had been sent to the scene as huge plumes of thick black smoke could be seen rising into the sky.
Paramedics attended, but London Ambulance Service said it had not treated any patients.
Flames could be seen around the top of the hotel and extended ladders were erected to access that area of the building.
The brigade said they had received more than 35 calls about the incident so far.
The 12-storey Mandarin Oriental Hyde Park had just completed the “most extensive restoration in its 115-year history”.
All 181 bedrooms and suites were “now more luxurious and comfortable than ever before” and the building’s “iconic facade was revitalised”, the company said.
The hotel is located between Hyde Park and the Knightsbridge shopping district, which includes Harrods.
Eyewitnesses posted videos on social media showing the large column of smoke rising from the top of the building and people in nearby Hyde Park turning their heads towards the sky.
One user called Arthur said: “Looks really bad. Prayers to those inside.”
Another, Penelope Evans, said: “My wishes to anyone is are hurt or effected by this.”
An LFB statement said: “The Brigade was called at 3:55pm. Fire crews from Chelsea, Kensington, Hammersmith, Battersea and other surrounding fire stations are at the scene.
“The cause of the fire is not known at this stage.”
Transport for London said the Sloane Street entrance of the Knightsbridge Tube station had been closed due to the fire and customers were advised to leave by Harrods.
London Ambulance Service and Metropolitan Police are also attending the scene.