The Electra Fire in Sierra Nevada Gold Country broke out on Monday afternoon and tripled in size to about 15.8 square kilometres. It was 5 per cent contained on Tuesday night.
The fire was making short, uphill runs, fire officials said.
"The rate of spread isn't what it was like yesterday, but it is still spreading," said Amador County Sheriff Gary Redman. He said firefighters were working to keep flames confined to unpopulated canyon areas.
Mandatory evacuation orders and warnings combined affected up to 700 residents in Amador County and 300 to 400 people in Calaveras County, Redman said. Evacuation centres were set up for people and animals.
The fire started at a recreation area that was packed with people, forcing 85 to 100 celebrating the holiday at a river to take shelter at a Pacific Gas & Electric Co. facility, Redman said. All were later safely evacuated.
"This was the closest I've ever been to a fire. It was literally within feet of us," said Milka Mikula of Valley Springs, who had gone to the river with her husband, her 5-year-old daughter and her 1-year-old son.
They had to wait about six hours before they could finally start for home, she told KCRA-TV.
"I just wanted to get home. I just wanted to get out of there with my babies. I was shaking really, really bad for quite some time," Mikula said.
Redman said the cause of the fire was not known, but that it started in the Vox Beach area of the North Fork Mokelumne River. He said that could suggest fireworks or a barbecue as a potential cause.
More than 100 fire engines, 1200 firefighters and 14 helicopters were sent to the fire, which was a threat to power infrastructure, the California Department of Forestry and Fire Protection said. The terrain was described as steep and rugged.
Cal Fire activated an incident management team for the fire. The teams "are made up of trained personnel who provide operational management and support to large-scale, expanding incidents," Cal Fire said.
One firefighter from the local fire protection district suffered burn injuries, Redman said.
Vox Beach is about 90km east of Sacramento in the heart of the Sierra Nevada region that is steeped with the history of the mid-1800s Gold Rush.
Several other small fires were burning in the state.
