A fire that raged for nearly 10 hours Saturday razed an ancient Tibetan town in southwest China that's popular with tourists, burning down hundreds of buildings as fire engines were unable to get onto the narrow streets, state media and witnesses said.

There was no immediate report of casualties, and the cause of the fire was unclear, although a provincial news site said it started in a guesthouse on an old street.

The blaze broke out in the ancient Tibetan quarter of Dukezong, which dates back more than 1,000 years and is known for its preserved cobbled streets, ancient structures and Tibetan culture. It is part of the scenic Shangri-La county in Deqen prefecture and had been renovated to lure tourists.

Once called Gyaitang Zong, the county in 2001 renamed itself Shangri-La, hoping to draw tourists by the reference to the mythical Himalayan land described in James Hilton's 1933 novel.

Like hundreds of Chinese cities and counties, Shangri-La renovated its old neighbourhood, Dukezong, turning it into a tourist attraction filled with shops and guesthouses.

The fire destroyed about 242 houses and shops in Dukezong, dislocated more than 2,600 people, and torched many historic artifacts, the official Xinhua News Agency said.

Most structures were made of wood and the fire spread easily because of dry weather, state media said.

He Yu, a resident, said she woke to loud, explosion-like sounds to find the ancient neighbourhood on fire.

China Ancient Town Fire

Firefighters work on roofs of buildings while an inferno that raged for 10 hours razed the ancient Tibetan town. (The Associated Press)

"The fire was huge. The wind was blowing hard, and the air was dry. I was scared because my home is a little distance away from the ancient town," she said. "It kept burning, and the firefighters were there, but there was little they could do because they could not get the fire engines onto the old town's narrow streets."

With fire engines kept out, local residents lined up to pass buckets of water to combat the fire, the Deqen prefecture government said.

More than 2,000 firefighters, soldiers, police, local officials and volunteers responded to the blaze and brought it under control late Saturday morning, the Shangri-La county government said.