Firefighters were called to the Lundin Links Hotel on Sunday after a blaze was reported at the derelict Fife venue.
Four fire engines, including a height appliance, were called to the site on Leven Road at around 7.30pm.
The scale and cause of the blaze has not been confirmed, but crews spent around an hour at the scene.
The Tudor-style hotel has been closed since 2014 and earlier this year it was subjected to vandalism.
In March, Fife Council took action to secure the building by boarding up its windows.
Developer Kapital Residential was given planning permission to convert it into 35 flats seven years ago, but the work on the C-listed building has never started.
Denice Purdie, director of the firm, says she only became aware of the fire when reading about it on The Courier’s website.
She said: “While I realise people will ask, ‘why not do something to prevent this happening?’ If people want to get in, they’ll find a way.
Locals ‘sick’ of issues at former hotel
“There was an incident in 2016 where folk were playing a role-playing zombie apocalypse game inside which led to a fire.
“We have been working with Fife Council to secure the building and prevent people from accessing it.”
She says work to redevelop the site is being held up by an issue over the water supply.
Iain Bayne, the Runrig drummer who lives next to the site, says he is “sick” of problems at the former hotel.
He said: “I didn’t see any flames but I saw smoke billowing out of the window in the old bar area.
“We are having an issue every week with the building.
“My big worry is someone is going to get hurt given the current state of the site.”
Police Scotland says investigations into the cause of the blaze are ongoing.
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