Two people were believed to be inside the building when the blaze took hold but escaped the premises unharmed after calling 999.
The Arundel Street end of the two-storey building later collapsed, narrowly missing firefighters.
South Yorkshire Fire and Rescue Service said five crews - about 25 firefighters - were at the scene tackling the blaze at its height.
Spokesman Steve Makepeace said: "There is lots of foams, plastics... lights, alcohol, you name it - everything that wants to burn is in that building."
A number of roads around the area, including Arundel Street, Matilda Street, Sydney Street, Cumberland Street and Furnival Road, were closed by police.
Student accommodation and a number of work places were evacuated by officers, who issued a warning to the public to keep windows and doors closed due to the fumes given off by the blaze.
Meanwhile structural engineers were called to the scene to survey the damage to the former warehouse, which was built almost a century ago.
Managing director of Gatecrasher, Simon Raine, said he was thankful nobody had been hurt.
He said: "It is not a great sight, but from our point of view the main thing is that the building was evacuated. There is no injury or loss of life and in these situations that is the key factor."
Crowds gathered to watch as the fire took hold of the building - which was one of Sheffield's biggest nightclubs and the original Gatecrasher.
One onlooker told BBC Radio Sheffield: "It is a shame - it was one of the best clubs in Sheffield."
Smoke from the blaze could earlier be seen for miles across the city.
Eyewitnesses said plumes of smoke gradually spread across the city centre and turned from a dark grey colour to thick white to yellow cloud.
Sheffield city centre resident Kirsten Law said: "I was on the phone when I first noticed it and thought the whole development was on fire.
"I've had to go around closing all the windows because the smell of the smoke's so strong and have been watching the charred bits fly past the window, and I'm on the other side of town from Gatecrasher."
That's pretty gutting!
Source: bbc.co.uk
