Spokesman Wilfred Solomons-Johannes said the fire broke out just after midnight in the Joe Slovo informal settlement, razing 20 shacks and two houses.
No casualties were reported, he said.
"According to preliminary reports it appears that the fire was caused in a dwelling where a petrol canister was found. The suspected cause of fire is arson."
An inquest docket was opened.
The city would provide those affected with food, blankets, clothing and building material.
On Wednesday, another shack fire left 60 people homeless in the Overcome Height informal settlement near Steenberg.
