Moss Lane remains closed this morning after more than 40 firefighters attended the blaze yesterday.
Firefighters were called at around 5.40pm after receiving reports of "black smoke" billowing around Moss Lane and "explosions" at a detached house in Moss Lane.
Crews battled the blaze using one hose reel and three jets and a crew continued with the damping down process overnight.
The building, which suffered substantial damage, is due to be inspected this morning.
A spokesman for the fire service said: "We attended a fire in Garstang overnight involving a building which was fully alight when we arrived.
"A neighbour and a passerby reported the fire which had spread throughout the building and up into the roof.
"The building is said by locals to be used by squatters and a thorough search of the property was made.
"Investigations will continue this morning."