Huge tongues of fire engulfing one home after another led President Michelle Bachelet to declare the zone a disaster area late yesterday.
Thousands of people, meanwhile, watched from distant vantage points as the hills burned bright red.
A dense column of smoke advanced towards Valparaiso's port, one of Chile's largest.
The city of 270,000, whose historic quarter was declared a UNESCO World Heritage site in 2004, draws thousands of foreign and local visitors each year.
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The fire passed through 12 neighbourhoods, destroying 500 homes, Mayor Jorge Castro said, telling state TV channel TN that 3,000 people had been evacuated.
Meanwhile, Interior Minister Rodrigo Penally said Bachelor had signed a decree authorising the army to help evacuate "the thousands and thousands of people who at this moment are being evacuated from their homes."
Penailillo said one person had been seriously injured by the fire, but that for the moment there were no known deaths.