The fire on Björkö, which it is thought was started by someone shooting an emergency flare, has now been brought under control.
The alarm was raised just before 6pm and an hour later residents of the island's main village were told to evacuate immediately. The blaze was started in the wilderness but spread rapidly towards the settlement.
Around 1,500 people live on Björkö, one of the larger islands to the west of Gothenburg in the city’s archipelago.
“There's so much smoke I can’t see if it’s burning elsewhere. It’s almost blowing a gale just now – this could have been really bad,” Björkö resident Jens Kosterhed, who watched firefighters carry out extinguishing work 50 metres from his house, told news agency TT.
There are no bridges between Björkö and the mainland, so an extra ferry was scheduled to help firefighters cross over. It is not clear how many people evacuated the area but those who did leave were moved to the south of the island. Later in the evening a number were allowed to return home.
Several witnesses say the blaze was started by an emergency flare shot from a boat near the island. Local newspaper GT reports that a boat with motor problems shot one such flare earlier in the day, though they could not confirm a connection between it and the fire.