The Great Seattle Fire of June 6, 1889, began a little after 2 p.m. in Clairmont's woodworking shop at Madison Avenue and Front Street (now First Avenue), and quickly expanded to the adjacent Denny Block building. At the time, Seattle's water system had limited capacity, and the volunteer fire department found the water pressure insufficient for fighting the fire. By 4 p.m., a four-block area was in flames. The fire, driven by wind from the northwest, continued to spread. Only Elliot Bay on the west and vacant lots on the north and east contained the fire until a bucket brigade saved the Boston Block at Second and Columbia. At about 6:30 p.m., the new Occidental Hotel at Yesler Avenue and James Street caught fire, and it became clear that the flames would spread to the wooden frame buildings south of Yesler. On the east, citizens used wet blankets, mops, and buckets to save the King County Courthouse and Henry Yesler's home along Third Avenue. During the evening, however, all of Seattle south of Yesler Avenue and west of Fourth Street burned except for the Oregon Improvement Company dock. The tideflats that were then south of King Street stopped the fire's spread south.

The burned areas were guarded and patrolled by members of the Washington National Guard from Seattle, Tacoma, and Port Townsend until June 11, 1889. After the guard left, however, thousands of scavengers and souvenir hunters began searching the ruins, causing one company to resume the 24-hour watch. The commander called for reserves from Vancouver in southern Washington Territory to relieve the exhausted militia, and Company H of the First Regiment arrived on June 15. Martial law was never in effect, and the National Guard turned looters over to the regular civil courts. On June 18th, the Seattle police swore in special policemen to take over for the National Guard.

By a month after the fire, many businesses had set up shop in temporary locations. Many erected canvas tents where their buildings had stood. Some had time to save equipment and merchandise during the spread of the fire, and others restocked from shipments and relief supplies that poured in from all over. The city of Seattle took several actions to prevent a recurrence: it purchased the formerly private water company and improved water pressure and pipes, decreed that all new buildings in the business district had to be made of stone or brick, and established a professional fire department.

"Front Street" and "Commercial Street" in Seattle are now known as First Avenue.