The fire was spotted about 7.40pm, burning through scrub and grass near the hill overlooking Mosgiel.
Two crews from the Mosgiel Volunteer Fire Brigade, and one from the Lookout Point Fire Station, responded and managed to quickly extinguish the fire.
Mosgiel Station Officer Steven Turnbull said about 150sq m of grass and scrub was burnt, and the fire came to within ''maybe 10m'' of the town's well-known sign.
Conditions were ''extremely dry'', but a lack of wind helped firefighters, he said.
''It would have been a different story had there been wind.''
The fire was initially thought to have been started by an exploding electrical transformer, but was now being treated as suspicious ''at this stage'', he said.
''An informant has passed on some information to us, which we have given to police,'' he said.
