Click here for a slideshow of the fire, or roll your mouse over the Eyewitness News Story Window above to watch Carlos Granda's accompanying video to this story.
Towering 40-foot flames shot through the roof and smoke could be seen and smelled for miles. The greater alarm fire in the single-story building quickly spread to other businesses.
More than 100 firefighters battled the blaze, which was knocked down just before 8 a.m. Crews made an aggressive attack on the fire, using aerial ladders to pour water on the flames from above. At one point crews entered the building, but they were forced to back out by the intense heat and flames. There was also concern the roof would collapse.
"There's a lot of, I guess, kind of, I don't know if cubby holes would be the word, but kind of hidden spaces," said Captain Tina Haro from the L.A. City Fire Department. "Lot of heat, lot of smoke, so they were driven back out."
As crews fought the fire from ladders outside and from adjacent buildings, another problem deterred them. The huge billboard on the roof of the building shifted. Fire officials worried it could fall on firefighters on the ground.
"When we do have collapse hazards, it's very difficult to put firefighters underneath that collapse hazard," said Chief Mario Rueda from the L.A. City Fire Department. "There's a great deal of risk associated with that and when lives really aren't at stake, we are not going to put firefighters at that great of risk."
After fighting the fire for two-and-a-half-hours, crews were able to get it under control, but the business inside appears to be a total loss.
Basque Nightclub was not open when the fire started and no injuries were reported.
Crews at the scene are checking the integrity of the billboard on the building's rooftop. They want to make sure it remains steady and won't collapse.
Arson investigators are on scene. They are trying to determine if the fire may be connected to other recent fires in the area.
"We're just going to start a systematic approach to take a look," said Battalion Chief John Miller. "First off, we'll determine the area of origin, which we believe we've already done that. Then we'll start eliminating accidental factors or confirming accidental factors to find what the cause of the fire was."
Arson investigators say it's going to take hours to look at everything and the clean up will take most of the day.
Hollywood Boulevard and Vine Street are closed and will most likely remain closed for the remainder of the day, possibly through rush hour. People are being diverted away from the area.
Correction: Eyewitness News originally reported this nightclub was previously the site of the Brown Derby in Hollywood. That proved to be incorrect -- the Brown Derby was actually located across the street.