London Fire Brigade confirmed the fire has taken hold at a waste recyling centre next to the famous site.
Battersea Power Station said the site was evacuated as a “precaution”.
LFB said: “Firefighters are tacking a fire at a waste recycling centre in Battersea. A large quantity of waste is alight.”
Four fire engines and 25 firefighters were rushed to the scene.
Black smoke could be seen rising from a warehouse near the four iconic white smokestacks.
Hundreds of workers were cleared from the scene, with video showing the a column of men in hardhats leaving Battersea Power Station.
One worker said: “Not sure of the damages yet, but were all alright.”
In a statement, Battersea Power Station said: “We saw the fire at the next door neighbours, the Western riverside Waste Authority site.
“Our Battersea Power Station construction workers were evacuated as a precaution but since the all clear from the London Fire Brigade they are now back on site. Back to business as usual.”
Battersea Power Station is a decommissioned coal-fired power station, on the southbank of Thames.
The iconic Grade II listed building is currently being redeveloped – with the power station building set to include 250 flats and office space.
It is also set to be the new London base of tech giant Apple.
The building is expected to reopen to public in 2021, with predictions of the redevelopment bringing £20 billion into London.