Developer Vevil International Group was funding the restoration of the building’s large dome and reinforcing internal structures of the former Camden Place Ballroom venue, now known as KOKO.
London-based contractor OD Projects is understood to be carrying out the work, which was due to be completed this spring.
The London Fire Brigade said at one point a third of the roof of the building was alight.
Smoke and flames could be seen billowing from the scaffolding in the roof.
Leader of Camden Council Georgia Gould said: “Heartbreaking watching the Camden Palace / Koko up in flames this evening, a building that holds so many memories and means so much to us in Camden.”