Crews from West Sussex Fire and Rescue Service were called to East Harting Street in East Harting, near Chichester at around 6.50pm.
At that time, six fire engines and a water carrier were at the scene.
Thick smoke was billowing from the house, a semi-detached home in the quiet hamlet.
People were told to avoid the area and nearby residents urged to close windows and doors.
As the operation continued, two more fire engines arrived to help tackled the blaze.
One of the houses was gutted, but crews managed to stop the worst of it affecting the next door home.
Firefighters were at the scene overnight and by 5.48am today they had issued a statement that crews were damping down and the incident was being scaled back.
They had been tackling the blaze for hours.
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