The drone hit a petrol tank at the Zawiya oil refinery in the Mediterranean town of Zawiya on Monday, about 50km west of capital Tripoli, the state-run National Oil Corporation said.
The attack ignited a massive blaze at the petrol-storage tank that burned through the night into Tuesday morning, according to the Civil Defence, a first responders' agency.
There were no reports of casualties, the health authorities said.
No group has claimed responsibility for a series of attacks on oil facilities in Zawiya, or the car car bomb in the eastern city of Benghazi on Monday.
The company said the tank, which held 4.5 million litres of fuel when it was hit, collapsed, and declared a state of maximum emergency at the facility.
Monday's strikes were the latest in a series of drone attacks on oil infrastructure in Zawiya, which houses critical energy infrastructure including the country's largest oil refinery, an export terminal and a power plant.
The drone strikes come as Turkish Foreign minister Hakan Fidan is set to arrive in Libya for a visit.
At the weekend, the oil company said drone strikes had hit a fuel tank and a desalination plant linked to the oil facilities in Zawiya.
It said the tank was damaged.
Separately, a senior military officer with the forces of powerful commander Khalifa Hifter was killed in a car bomb on Monday evening in the eastern city of Benghazi, authorities said.
Major General Fawzy al-Mansouri, director of the military intelligence of Hifter's self-styled Libyan National Army, was killed when an explosive-laden vehicle exploded into his car in the Sayyida Aisha neighbourhood in Benghazi after, the LNA said.
The LNA is allied with one of Libya's two rival governments, which controls the country's eastern and southern parts.
The attacks underscored the fragility of security in the oil-rich country. Libya, a largely lawless Mediterranean country, has been plunged into chaos and division following the 2011 uprising-turned-civil war, which toppled and later killed longtime dictator Muammar Gaddafi.
Amid the chaos, militias grew in wealth and power, particularly in Tripoli and the western part of the country.
The county has been divided for years between rival administrations in the east and west, each backed by armed groups and foreign governments.
It is governed by Prime Minister Abdul-Hamid Dbeibah's government in the west and by the administration of Prime Minister Ossama Hammad in the east.
