The fire broke out inside the derelict building in Avenham Place at around 4.30am and five fire engines and the aerial ladder platform were called to the scene.
The fire is now out but crews remain on site as damping down continues and the building is made safe. No injuries have been reported.
Pictures from inside the building show the dangers faced by firefighters, with charred stairs and roof beams on the brink of collapse.
The crumbling Victorian building has stood empty for 12 years and developers have been seeking to demolish the building and replace it with a cluster of four and five-bedroom homes.
It has been repeatedly targeted by vandals and the fire service says an investigation is now under way to establish whether today's fire was started deliberately.
A fire service spokesman said: "At 4.31am, five fire engines from Preston, Bamber Bridge, Penwortham, and Blackpool, and an aerial ladder platform (ALP) from Blackpool, attended a derelict building fire in Avenham Place, Preston.
"The fire involved a two-story, derelict building approximately 10x10m in size. The whole property was affected.
"Firefighters used the ALP, three jets and a partner saw to extinguish the fire. They then proceeded to damp down the affected areas.
"No casualties have been reported. An investigation into the cause of the fire is now underway."
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