A thick plume of smoke could be seen across the area, as dozens of stunned witnesses stop to watch the fire.
It stretches from the ground floor of the seven-storey building to the roof, with half of the bottom level ablaze.
Witnesses reported the building being evacuated, and bystanders covered in 'black ash' as the police installed a large cordon around the scene.
It is unclear what caused the blaze, which is now being tackled by crews drafted in from around London.
A London Fire Brigade spokesman said: 'Eight fire engines and around 60 firefighters have been called to a fire at a restaurant in Albemarle Street in Mayfair.
'Half of the ground floor kitchen and half of the ducting from ground floor to roof level is alight.'
Kate Thomas, 26, who works on the same street as the Thai Airways building told MailOnline that the fire began in an Indian restaurant - located inside the
She said: 'I saw the fire soon after it broke out, and the smoke must have stretched around 50 metres above the building. It was huge.
'Hundreds of people were stood around watching the fire. They even evacuated the pub opposite the road, so people were standing around with drinks watching.'
Ms Thomas described 'black ash' falling on nearby bystanders, and said that those in the Thai Airways building were likely evacuated following the blaze.
She said: 'They're bringing it under control now, but a cordon remains in place and they're presumably deciding what to do next.'
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