Twelve teams of firefighters rushed to the scene to put out the blaze, which has worsened Rome’s ongoing rubbish crisis.
The stench of burning garbage wafted across the historic centre after the fire began overnight.
City authorities said anyone who could smell the fire should close their windows and avoid going outdoors.
A kindergarten nearby the dump was also closed.
City authorities said the national civil protection agency and the environmental protection agency had been called to an emergency task force meeting and that air quality in the area was being monitored.
There was no indication of what caused the fire at the Tmb Salario site, which processes around a quarter of all Rome’s garbage.
Locals have long protested against the dump, complaining of putrid odours and calling for its closure.
Arson has been suspected, however not confirmed.
“Once the fire is out, it will be possible to establish the cause,” Stefano Laporta, the head of the Higher Institute for Environmental Protection and Research (ISPR), said.
“The fire is serious but what is worrying is the management of waste in Rome in the coming days.”
Authorities are now scrambling to find an alternative to deal with the city’s normal rubbish and additional waste over Christmas.
“All institutions are working to facilitate a solution,” Rome Mayor Virginia Raggi said.
The mayor made an appeal to “all the cities of Lazio and of the other regions to cooperate at this time, especially as it is before Christmas, to support AMA to resolve this situation as soon as possible”.
AMA has previously been criticised for allegedly failing to prevent mounds of rubbish from overspilling onto the streets of Rome.
