The building, built in 1872, was gutted by the fire, which started just before 7am, Fire Service spokesman Kevin Donaldson said.
More than 60 firefighters battled to contain the blaze, which caused a roof to collapse and left structural damage to the building walls.
It was believed the fire started in the oldest part of the building, but the cause was still being investigated.
Yesterday afternoon, it was feared a wall facing on to West St would fall down and the Ashburton District Council was considering whether to let it collapse, or demolish it.
Trust southern region general manager Malcolm Duff said the flour mill was one of Ashburton's major landmarks and would be sorely missed by the community.
"This is a terrible loss of Ashburton's, and Mid Canterbury's, heritage. The buildings have been a landmark in the town since the 1870s and were still being used by several businesses to this day," Mr Duff said.
