Laguna Beach police say the fire started shortly after noon in the canyon area above Montage Resort. Authorities issued a voluntary evacuation for the 700-900 blocks of Nyes Place.
By 7 p.m., officials said the fire was contained and crews would stay overnight to make sure the fire didn't flare up.
The brush fire scorched about 3 to 5 acres. The Orange County Fire Authority said at one point 20 homes on Nyes Place were threatened due to the possibility of winds carrying over flames.
Fire officials said 150 firefighters were battling the blaze, and one firefighter was hurt during the firefight. That firefighter was transported to an area hospital to be treated for unknown injuries, but was in stable condition.
The northbound Pacific Coast Highway was down to one lane near the fire zone, said OCFA.
There were no reports of any structural damage. The cause of the blaze was under investigation.