Fire and Rescue NSW crews worked throughout the night to contain a fire at Upstairs at Fred's overnight.
This is the second building to be destroyed by fire in Camden in recent weeks.
Camden police officers discovered the building was alight at 3.10am during a routine patrol of Argyle Street, Camden.
Crews arrived within minutes to find the second storey restaurant well alight and immediately attacked the fire to prevent it from spreading to neighbouring buildings.
Adjoining businesses were saved through a massive firefighting effort with two aerial appliances and more than 40 firefighters battling the blaze.
Fire and Rescue NSW crews are working to completely extinguish the fire and conduct salvage work on adjoining properties that have suffered smoke and water damage.
Upstairs at Fred's owner Steve Wisbey told the Advertiser he was still in shock about the incident.
"We are going through the stages of grief," he said.
"We had a call at about 5am from the restaurant manager asking us to get in touch with the police because something was up at Fred's.
"So we jumped out of bed and it was weird because we couldn't even see the smoke or anything.
"We called the police and they told us that Fred's was on fire so we headed straight down there but it wasn't until we saw or the fire engines and the flames that we knew what was happening.
"We couldn't do anything but stand there and watch it burn - it was devastating."
Mr Wisbey said he had full faith in investigators to find the cause of the blaze.
"At the end of the day there are a lot of old buildings in Camden," he said.
"Some of the speculation online has been disgusting and upsetting - the NSW Police, Fire and Rescue NSW and the forensics teams will get to the bottom of this.
"Right now people should be thinking about the business owners whose livelihoods have been destroyed and the staff members who no longer have jobs.
"We are all grieving - and it's not just us but the town itself because the Whiteman building was a much-beloved building in Camden."
Mr Wisbey said the support he and his family had received was overwhelming.
" People have been ringing and messaging non-stop to ask us how we are doing and what they can do to help - it's beautiful and very overwhelming," he said.
"We would like to get Fred's up and running again one day after all the work we had done to get it where it was."
The stores underneath Upstairs at Fred's were also damaged by fire, smoke and water.
Mel Fitzpatrick, the owner of Miracle Skin Therapy, said hearing that her salon had been severely damaged in the blaze was "devastating".
"Around 5am I received a call from the landlord saying that there had been a pretty bad fire at the arcade," she said.
"Hubby and I got out of bed, we got the baby out of bed and I headed straight for the studio.
"When I got there it was all cordoned off but the firefighters came over and told us that basically it wasn't good.
"The shop was damaged by smoke water and fire."
Ms Fitzpatrick said their business had operated in the Whiteman's Arcade for the past four years.
"Covid was a bit of a shock but we came through that even better than ever," she said.
"We were smashing goals daily, we had waiting lists of people - it's just heartbreaking.
"Whiteman's is one of the oldest arcades in Camden and it is devastating to see it like this."
However Ms Fitzpatrick said the community's support had been wonderful.
"We've had so many messages from people who want to help, from other people in the industry, from people we don't even know - it's really amazing," she said.
"We do hope to come back to Camden one day."
Fire and Rescue NSW fire investigators will be on scene today to commence a formal investigation.
A crime scene has been established and investigations are underway. The cause of the fire is not yet known.
It is not believed anyone was inside the building at the time.
Last month firefighters were called to the Ray White offices on Argyle Street, Camden after receiving reports of a fire.
The building was severely damaged in the August 31 fire with parts of the roof collapsing at the height of the blaze.