Thick black smoke and flames were shooting up from five-floor buildings surrounding the market as firetrucks attempt to get access to the fire, Presstv Reported.
Residents were throwing what belongings they could from the buildings and some people on the rooftops were using small buckets of water to try to stop the fire.
A fire truck was also spraying water onto the flames.
The fire started in the morning and became a major blaze by midday.
Officials haven't yet said if any people were injured in the fire or commented on the cause of the blaze.
The Balogun market sprawls across many blocks on Lagos Island. It is well known as one of the best places in Lagos to buy colorful Nigerian fabrics, apparel and shoes.