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Twenty-five fire tenders were fighting the blaze at Chowk Bazaar in the heart of Jorhat town and it was yet to be brought under control, they said.
The fire, suspected to have been caused by an electrical short circuit at a shop, spread fast in the congested market, they added.
There was no report of any casualty as all shops were closed with owners and staff having left for their homes, police said.
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Additional fire tenders were brought in to fight the devastating blaze from the nearby towns of Titabor and Mariani, and the Golaghat district, officials said.
The fire tenders were finding it difficult to reach the spot due to narrow roads, locals said.
The losses, expected to run into crores of rupees, can be ascertained only after the fire was extinguished, police said.
This is the second incident of a major fire in Jorhat in two months. A massive fire in December gutted several shops in the Marwari Patty area.