Singer Robbie Williams was among guests seen fleeing the building after firefighters were called shortly before 4pm.
"The Brigade's 999 control officers have taken more than 35 calls to the fire, which is producing a lot of smoke".
"When I got up above ground I saw all the smoke coming out of the building".
"We thought "shit the hotel is on fire", got our things and went to the exit".
He said the builders on the roof had been cutting materials and doing other work during the day. "I've never seen anything like it. Fingers crossed nobody's hurt".
Anna Whiteley, a journalist at Golfing World magazine, tweeted around 4:30 p.m. that she had been evacuated to a nearby hotel, and praised "how well the evacuation operation [has] been put together".
Towering clouds of thick, black smoke could be seen billowing out of the posh hotel's top floor, according to videos posted to Twitter.
Staff from the hotel were evacuated to Hyde Park where they were given bottles of water.
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London's ambulance service has also dispatched a response team. In a statement, the London Fire Brigade said: "The brigade was called at 3.55pm". Crews wearing breathing apparatus are carrying out a search inside the building.
Around 120 firefighters and police officers were called to the scene, and the surrounding roads have been closed.
A spokesman for the exclusive Hong Kong-based hotel chain told MailOnline: "We are aware of a situation at the hotel and London Fire Brigade are at the scene".
Firefighters tackle a blaze at the Mandarin Oriental hotel in central London on June 6, 2018.
The five-star hotel completed what it called the "most extensive restoration in its 115-year history" only last week, after almost two years of work.
It has a number of luxury restaurants including Dinner by Heston Blumenthal.
The ornate Edwardian building near Hyde Park opened as a hotel in 1902 and recently underwent extensive renovations. The 18-month project to transform all 181 bedrooms, along with public areas was unveiled to press on May 31. There were no fatalities or injuries in the incident. The luxury 12-storey hotel is a favourite with celebrities and royals, including Helen Mirren and members of the royal family.in 2011, the Queen hosted an event there the night before the Duke and Duchess of Cambridge's wedding in 2011.