Fire services staff said it took between two and three hours to control the blaze, which destroyed at least 2ha of bush.
The fire started next to the hot and cold stream on Waiotapu Loop Rd at about 1.45pm yesterday, close to the attraction's visitor centre.
Staff said they saw flames leap well above the trees only 100m away from the carpark.
One staff member is reported to have sprinted around all the walking tracks raising the alarm during the evacuation of the public.
No one was injured in the blaze, which was attended by more than 40 firefighters.
An investigation is being held to find the cause of the fire.
Thermal Wonderland groundsman Martin Pearce said the fire got out of control quickly.
He said he went down to the hot and cold stream about 1.50pm to see where all the smoke was coming from and saw fire shooting up the embankment opposite the road.
"It was so fast. It shot right up the trees and bush."
He said there had been a busload of tourists swimming at the hot and cold stream before the fire started.
Wai-O-Tapu manager Alex Leinhardt said his house must have come close to being burned down.
He said this was the first bush fire staff had seen in the area during the summer.
Richard Horn, Rotorua District Council's deputy principal rural fire officer, said fire crews had been supported by two helicopters from Murupara.
Firefighters had come from all over to help battle the blaze, working well into the evening to get everything under control.
Mr Horn said one fire crew was to remain in the area overnight, with 30 firefighters expected to come and dampen hotspots for most of today.
Mr Horn said the police cordon, which blocked entry to Waiotapu Loop Rd, was lifted yesterday evening but a small section of the road would stay blocked today.
When The Daily Post arrived at the scene a big group of locals was standing outside the Waiotapu Tavern talking about the fire.
One family was in tears as they waited anxiously to hear news of their property.
Another man said he had just come from Waikite Valley and could see the smoke from there.
A total fire ban remains in the area.
FIRE STORM: Flames ripped through the dry bush next to Wai-O-Tapu Thermal Wonderland quickly, coming close to the visitor centre and the manager's house.