Shortly after 9pm, emergency services were called to a child care centre in Gwandalan Road.
Bankstown Police attended and found the premises well alight.
The fire was extinguished by Fire and Rescue NSW officers a short time later while police spoke with several witnesses at the location.
The building was extensively damaged but there were no reports of injury.
The cause of the fire is yet to be determined.
Police have commenced an investigation into the incident and have appealed for anyone with information about suspicious or illegal activity in the area prior to 9pm to come forward.
Anyone with information or dash-cam footage relating to this incident is urged to contact Crime Stoppers: 1800 333 000 or https://nsw.crimestoppers.com.au. Information is treated in strict confidence.