A fire gutted the Novaco Child Care Centre in North Vancouver early on Saturday morning..

Early indications suggest arson may be involved.

The walls of the structure on Redwood Street remain standing, but the interior has been completely gutted by the blaze, which began about 4 a.m.

Michael Thurston, who lives across the street from the daycare, said firefighters had a difficult time bringing the fire under control.

"There were just flames everywhere — like coming out the side," Thurston told CBC News, adding it took firefighters nearly three hours to quell the flames.

Lisa Hubbard, the school's executive director, said she arrived just 10 minutes after the fire started.

The plan now is to use two other buildings in the area to accommodate the children, she said.

"The good thing is children are resilient and the caregivers are really the heart of child care," she said. "As devastating as it is to lose the building, we can keep the staff working."

The investigation is in its early stages, but some neighbours say they saw kids in the school's yard around 2 a.m.