Fire crews were called to the three-storey building on Montague Street in Lunenburg just before 7 p.m. Friday and remained at the scene throughout the night.
RCMP Cpl. Ted Mugford says the blaze isn't considered suspicious and the fire marshal has taken over the investigation.
He says an electrical engineer who examined the scene found the cause appeared to be "electrical in nature."
No injuries were reported but investigators say the building has been heavily damaged.
Fire chief Darren Romkey said crews from 14 local fire departments were on scene for nearly 12 hours.
"If you look at it from the outside, it doesn't look too bad, but the roof is pretty well all gone and the interior is burnt pretty good," Romkey said Saturday.
The building was a part of Lunenburg's picturesque waterfront, and it's not yet known whether it can be saved, said Romkey.
"If you look at any picture that a tourist may buy from town of the waterfront, it is a large red structure right in the middle of all the buildings on the waterfront, so if it is actually torn down, it's going to leave quite a hole there."
Romkey said the building's age and construction made it difficult to fight the fire.
He said once fire officials determined that no one was inside, they focused on preventing it from spreading to other surrounding buildings.
"We were lucky with the weather, there was no wind, so we didn't have to worry about that too much," said Romkey, adding that a sailboat that was only a couple metres from the building was also saved with minimal damage.