NSW Fire and Rescue Inspector Trent Lawrence said the fire caught hold in the building's second storey at about 4pm and spread into the roof cavity, fanned by the wind.
Some 50 firefighters are onsite including crews from Goulburn, Crookwell, Moss Vale and 20 RFS personnel.
They were joined just before 6pm by an aerial appliance brought especially from St Andrews to access the roof and give an overall view of hotspots. Inspector Lawrence said firefighters were concerned about the roof's structural integrity.
The aerial appliance is 33 metres high and has a 15m reach. Personnel were able to gain control of the blaze in the upper level as a result. Senior firefighter Dave Kitching believed crews would keep a watch on the building overnight.
A foam appliance is also on the way from Sydney.
Police Inspector Matt McCarthy was also onsite and told the Goulburn Post officers would investigate only if the fire was deemed suspicious. Fire investigators will be assessing this tonight and tomorrow.
Owner John Ferrara, who said he was in Bankstown when the blaze broke out, said he was very disappointed.
He did not wish to comment further, except to say the building wasn't insured.
The structure was vacant but he said a caretaker who lived at the rear, was not there at the time.
The fire at St John's Orphanage has apparently been brought under control.
Goulburn Mulwaree Council and NSW Police on Wednesday afternoon closed both Mundy and Bourke Sts in a bid to ease the flow of traffic to the area.
Police, at 5pm, were still urging people to stay away.
A large portion of the roof of St John's Boys Home appeared to have fallen away in a blaze that captured the City's attention.
Initially the Goulburn Fire Brigade concentrated their attack on the fire from the front of the building using 70mm hose lines to spray water onto the roof level where the fire had taken hold.
RFS units from Crookwell went around to the Combermere St side of the home, setting up two hoses to battle the flames.
The sound of collapsing masonry could be heard from within the building, as roof tiles fell inward, leaving the timber frame skeleton exposed.
Just before 6pm, an aerial pumper - a firefighting platform on a cherry picker - arrived on the scene, with reports that the fire is still slowly spreading in the roofspace.
Some 40 fire fighters joined the efforts. Uniformed police, police detectives and Ambulance crews were also present.
It is understood Fire & Rescue NSW Trucks from Goulburn, Crookwell, St Andrew's, Moss Vale, and Busby were tasked to the incident. Rural Fire Service crews also attended.
Journalist Peter Oliver, one of two journalists who attended the scene, said smoke appeared to be pouring from an area of the roof, where a section had been destroyed.
Reports of a loud bang heard moments before the building caught fire have been unconfirmed by Police and Fire Services.
Almost two hours after the blaze was first reported, small flames could still be spotted flickering through the roof of the building.
Neighbours 'forever' reporting vandals
Phillip Phelps, who lives a couple of doors from the old orphanage, told the Post he was forever ringing the police about people in the building and the sounds of damage from within.
Mr Phelps said kids and others often got into the place without permission.
Christine McLaughlin, who lives across the road from the former home, echoed Mr Phelps’s comments, saying she could often hear the sound of windows smashing.
In recent times people have been conducting ghost tours at night
Mrs McLaughlin said the first thing they knew about the fire was the siren from the fire engine arriving at the orphanage.
Another person standing outside the police line said that he had contacted a couple of relatives who had spent part of their childhood at the orphanage, and they were very upset that their childhood home was being destroyed.
They had been hopeful that the owner could eventually give the building a new purpose, he said.
In November 2014, the Post reported former residents of St John's were "dismayed and saddened by the state of the building".
“It’s in a very sad state with just about every window smashed,” Phil Merrigan said at the time.
“…There’s no soul left in the building. We’re seeing what we called our home rotting.” (More on that story here)