UPDATE: Investigators have concluded the fire was started by a dryer in the laundry with the fire causing extensive damage to the kitchen, main dining area and a separate function area - the Mill Room and outdoor beer garden.

EARLIER: 12:07am: Horsham's Victoria Hotel has been extensively damaged after a fire broke out in the kitchen of the popular hotel.

Horsham Fire Brigade captain John St Clair said the fire started in the kitchen area of the hotel.

"When we arrived the kitchen area was fully involved with flames coming out of the roof," he said.

Fire fighters searched the hotel and rescued an occupant and his dog from the hotel.

"One man was treated by paramedics for smoke inhalation at the scene," Captain St Clair said.

Crews had stopped the spread of the fire within the building and brought it under control by 1.06am.

The fire had made its way into the roof of the hotel and a specialist truck from Ballarat was called to help with the fire.

Four fire brigades and 30 firefighters were fighting the fire which started at about 11pm.