Smoke was seen billowing from Love Machine - a nightclub with an infamous history including fatal shootings - in the early hours of Thursday morning.
Officers spotted the blaze, at the corner of Malvern Road and Chapel Street in Prahran, in Melbourne's southeast, while out on patrol shortly after 2am.
A witness called triple zero about the same time to report a loud bang and a light-coloured hatchback fleeing the scene.
Fire crews were at the scene within four minutes, with 45 firefighters called to battle the blaze.
It was brought under control shortly before 4.30am, though fire crews continued to attend to the damage hours later.
No one was inside the club when the fire broke out, and it had been closed since September, police said.
There have been no reported injuries.
Investigations are ongoing but police believe it was a deliberate attack.
"We are obviously treating this fire as highly suspicious given the circumstances and the history of this venue," Arson and Explosives Squad Detective Inspector Chris Murray said.
"Noting this was a deliberate act, we will keep an open mind as to why this has occurred."
It is believed a number of offenders used a vehicle to ram the front door of the building, before spreading accelerant and setting it alight, police said.
Two 20-litre jerry cans were seized from the front of the premises.
Multiple witnesses reported seeing two vehicles travelling in convoy along Commercial Road about 1.50am, police said.
The venue was completely destroyed and surrounding buildings are also expected to be impacted, police said.
"The behaviour of these offenders is nothing short of frightening," Det Insp Murray said.
"Businesses and livelihoods are being destroyed, landlords' insurance premiums are skyrocketing, and the reality is that we could have had a number of people killed as a result of this fire."
A stretch of Malvern Road between Chapel Street and Surrey Road remained closed to trams and traffic hours after the fire was brought under control.
Power and gas companies were asked to cut off supplies.
The nightclub has been the scene of serious violence in recent years.
Gold Coast player Jamarra Ugle-Hagan, who was taken at pick 1 in the 2020 AFL draft, narrowly missed being hit by a stray bullet outside the venue in August.
He was not accused of any wrongdoing.
Love Machine's licensee was served with a suspension order later that month following a spate of violent attacks and brawls.
In April 2019, a security guard and patron were killed in an early morning drive-by shooting outside the venue.
Three other people were also struck with bullets.
Venue owner Sterling Nightclubs also ran Lux nightclub in South Yarra, which was targeted in an arson attack in November 2024.
Police have urged anyone with information to come forward.
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