Despite attempts by authorities to downplay the incident, reports said Russia's navy chief Admiral Viktor Chirkov flew out to the scene along with a slew of top naval brass.
After battling the flames for several hours, firefighters were now filling the dock with water "and the operation may last several hours," said Ilya Zhitomirsky, spokesman for the United Shipbuilding Corporation which manages the facility.
The aim would be to submerge the submarine.
"Employees and crew have left the submarine in an organised fashion," it said. "Nobody has been hurt."
Also Read
The vessel -- a cruise missile type sub called Orel with two reactors that is classified as Oscar-II by NATO -- had nuclear material aboard.
"The nuclear fuel had been unloaded from Orel before it was put up on dry dock. The reactor is turned off," Zhitomirsky told RIA Novosti agency.
"There are no weapons on board. It is clear that if the submarine was armed it would not have been accepted for repairs," said the shipyard's spokesman Nikolai Blinov.
A representative of the Severodvinsk fire service however told AFP that "you can't smell the smoke in the city" and that municipal firefighters were not being called in to help the shipyard's own fire department.
The website of the Zvyozdochka (Star) shipyard said the Orel -- part of Russia's Northern fleet based in the region of Murmansk in the Barents Sea -- has been under repair since November 2013 and that the work would take two years.
Severodvinsk is located in Russia's northern Arkhangelsk region, on the White Sea.