Witnesses have described the fire at Tomaree Head overnight as an erupting volcano.
The flames could be seen bursting from the bush near the peak of the mountain, also known as Mount Tomaree, on Tuesday night.
The blaze started about 5.30pm and spread quickly, but did not pose a threat to homes.
Fire fighters remain on site on Wednesday morning and the fire is at advice level.
The mountain is closed to bush walkers.
Witness Nigel Dique could not believe his eyes when he captured photographs of the blaze last night.
“Tomaree Head started looking like Mount Etna,” he said.
Port Stephens resident Jodie Vucas said news of the fire at Shoal Bay was a shock.
“Having been a local in Port Stephens for over 20 years now, I was incredible saddened to learn that our very own Mount Tomaree was in fact on fire this evening,” she said.
“I hope and pray it is contained very soon.”
IN NEWS TODAY: