Aerial footage broadcast live on Japanese TV showed massive orange flames and thick smoke spewing out of buildings in the city of Itoigawa in Niigata prefecture.
Troops were on their way to the coastal city after Niigata Governor Ryuichi Yoneyam requested military aid, an official in the fire division of the prefectural government said.
"At the moment, activities to put out the fire are still going on," he told AFP on the phone.
The blaze started at 10:28 am at a Chinese restaurant, and a total of 17 fire trucks have been deployed in the area.
More From This Section
The blaze spread quickly due to strong winds, according to public broadcaster NHK.
"Sparks of fire flew around," a man in the neighbourhood told NHK.
"That's why far away buildings unexpectedly caught fire and it became large-scale. I've never seen something like this before."
The city also issued an evacuation advisory to 586 residents in the neighbourhood.
Despite the scale of the fire, there were few reported injuries.