The fire, which broke out shortly before 4 a.m., burned along the hills above Altadena, Arcadia and Pasadena.
Officials said the observatory was evacuated, and the fire is not burning near foothill residences. It was not clear how many people were inside the observatory at the time.
Chantry Flat and surrounding recreational cabins were also evacuated, and Red Box as well as Mt. Wilson roads were closed to the public.
The fire charred approximately 30 acres, Los Angeles County fire officials said. It was at 10 percent containment by 3 p.m.
VIDEO: AIR7 HD over fire near Mount Wilson Observatory
Firefighters said the blaze has the potential to grow up to 600 acres.
The fire started near the top of the mountain and inched slowly toward communication towers near the Mount Wilson Observatory.
Crews from the Los Angeles County Fire Department and the Angeles National Forest battled the flames with water drops from helicopters equipped with night vision technology before sunrise.
"We hit it really hard last night with the aircraft that we were able to fly overnight...that helps slow the progression of the fire until we can get our hand crews down here," said Nathan Judy, with U.S. Forest Service.
Helicopters and fixed-wing aircraft attacked the fire aggressively, dropping water and Phos-Check to prevent the blaze from spreading.
Approximately 500 firefighters were battling the brush fire. They were aided by light winds and cool morning temperatures.
The cause of the fire was not known. No injuries were reported.
The glow of flames and smoke was seen across the Los Angeles basin, surrounding valleys and as far away as Orange County.
Mount Wilson Observatory history:
The historic Mount Wilson Observatory is home to the 100-inch telescope founded by American solar astronomer George Ellery Hale.
Mount Wilson celebrates the 100th year anniversary of the telescope on Nov. 4.
For the first half of the 20th century, Mount Wilson was the most famous observatory in the world. The discoveries made at Mount Wilson revolutionized our understanding of our place in the universe.