Varennes is on Montreal's South Shore, just southeast of the island.
The leak was caused by a break in equipment and has produced a white cloud over a section of the municipality close to the plant.
Highway 132 is also closed in both directions between Montée Picardie and Montée de la Baronnie as crews work to contain the leak.
People living within one kilometre of the plant are being asked to stay inside.
The city is also asking people who were evacuated from their homes to head to the Maison des aînés at 2016 René-Gaultier Boulevard.
An official with Quebec's Urgence-Environnement is on the scene and the TAGA mobile lab is en route to the plant.
The environment ministry issued a statement Saturday saying that it is taking all measures and precautions necessary to ensure the safety of the population.