Smoke was seen billowing from Love Machine - a nightclub with an infamous history including fatal shootings - in the early hours of Thursday morning, rising in a thick plume near the corner of Malvern Road and Chapel Street in Prahran.
Officers were patrolling near the venue, in Melbourne's inner southeast, when they spotted the blaze shortly after 2am.
Fire crews were at the scene within four minutes of the first Triple Zero call, with 45 firefighters called to battle the fire.
The blaze was brought under control shortly before 4.30am, though fire crews continued to attend to the damage hours later.
No one was inside the club when the fire broke out, and it had been closed for some time.
There have been no reported injuries.
The fire is being treated as suspicious and an arson chemist will attend to determine the cause, police said.
"We've got a number of investigations going on at the moment," a police officer told reporters at the scene.
"We've got a number of leads including some images of some vehicles ... leaving the area and CCTV footage that we're going to be reviewing."
A stretch of Malvern Road remained closed to trams and traffic hours after the fire was brought under control, between Chapel Street and Surrey Road.
Power and gas companies were asked to cut off supplies.
The nightclub has been the scene of serious violence in recent years.
Former Western Bulldogs forward Jamarra Ugle-Hagan narrowly missed being hit by a stray bullet outside the venue in August.
The AFL player was not accused of any wrongdoing.
The licensee of the venue was served with a suspension order later that month following a spate of violent attacks and brawls.
In April 2019, a security guard and patron were killed in an early morning drive-by shooting outside the venue.
Three other people were also struck with bullets in the attack.
Love Machine owner Sterling Nightclubs also ran Lux nightclub in South Yarra, which was targeted in an arson attack in November 2024.
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