The fire, according to the conclusion of interrogation that was carried out by the Court of Thessaloniki, began on Saturday 5 /18 August 1917 roughly at 15:00. It began in a small Olympiados street refugee house in the district Mevlane between the Center and the Ano Poli quarter. It was caused by a kitchen fire spark, which fell upon an adjacent straw deposit . The lack of water and the indifference of the neighbours, prevented a possible extinguishment of the initial fire. Eventually, an intense wind helped the fire transmit to the neighbouring houses, continuing on throughout Thessaloniki.
Initially the fire followed two directions, to the Government House (Diikitirio) via Agiou Dimitriou street and to the Market (Agora) via Leondos Sofou street. The Diikitirio was saved by its employees that hurried to help. The wind strengthened, helping thus the fire spread towards the center of the city. Early in the morning of the following day, (6/19 August) the wind changed direction and the two foreheads of the fire destroyed the commercial center. At noon the fire passed around the Ayia Sofia temple without affecting it and continued easternly up to Boulevard Hamidie(currently Ethnikis Aminis street ) where it stopped. At the evening of Sunday 6/19 August, the fire completely died out.
There were not enough quantities of water for firefighting, because most part of it was kept by the Allied Forces for the catering of camps in the suburbs of the city. In t he city there was no organized fire brigade service, but only a few firefighting teams privately owned by insurance companies. These private firefighters were usually untrained with little or no equipment.
The only hope for Thessaloniki was the intervention of the Allied Forces. In the afternoon of the first day of the fire, a French detachment exploded three houses next to the Diikitirio with the intention to create a safety zone. However, the French detachment did not continue and ended up withdrawing, letting the fire continue its destructive course. The next morning, two British fire engines stopped the fire near the White Tower (Lefkos Pirgos). The customs building (Telonio) was saved by French soldiers.
The Allied Forces rejected the idea of interrupting the water supply of their camps and hospitals to assist the firefighting. General Sarrail inspected the region of Diikitiriou for a few hours during the afternoon of the first day but he did not return. There are reports, verified by multiple sources, that the behavior of French soldiers was not what could be expected. Instead of helping the firefighting and providing care for fire victims, many soldiers proceeded in pillaging shops and residences, preventing the householders from rescuing their fortune so that could loot them later themselves. The next day, General Sarrail ordered the execution of two French soldiers who were arrested for selling stolen jewels. On the contrary, the British soldiers assisted in the firefight as long as they could, particularly with the transportation of fortunes and fire victims with military lorries to settlements for refugees (French drivers asked for money for the same thing).
The people affected by the fire totaled approximately 72,500. The Pallis report counts separately the fire victims of the three communities of Thessalonica: 50,000 Jews, 12,500 Orthodox and 10,000 Muslims.
The care for the fire victims started immediately after the fire. The Greek authorities constructed 100 houses for the accommodation of 800 families. The British authorities established three settlements with 1,300 tents where they accommodated 7,000 homeless. The French authorities set up a settlement for 300 families, and built the Union of French Ladies, a smaller camp for 100 families. Five thousand individuals were transported free of charge by train and relocated to Athens, Volos and Larissa. The Greek authorities set up distribution points providing free bread to 30,000 individuals. The American, French, and English Red Cross distributed food among the homeless. Many Jews, having lost everything, left for the western countries, mainly France, while a number following the Zionist movement relocated to Palestine.
Immediately after the first off-hand response, governmental representative Pericles Argyropoulos founded the Administration for Victims of Fire for the care of thousands of fire victims, and the government approved credit of 1,500,000 drachmas for the first needs. Simultaneously, the Central Committee for Donations was organized with a line of sub-committees for the collection of donations and the distribution of money and goods.
The fire destroyed 32% of the total area of Thessaloniki, about 1 square kilometer. The burnt area was located between the roads of Aghiou Dimitriou, Leontos Sofou, Nikis, Ethnikis Amynis, Alexandrou Svolou, Egnatia (from Aghia Sofia), and Aghiou Dimitriou. This region is hereafter mentioned in official documents as "Pirikafstos Zoni" (burnt zone). The extent of material damage within Thessaloniki was calculated to 8,000,000 golden pounds.
Among the buildings that were burned included the Post office, the telegraph office, the town hall, the companies of water supply and gas, the Ottoman Bank, the National Bank, the deposits of the Bank of Athens, parts of the Saint Demetrios church, two other Orthodox temples, the Saatli Jami, 11 other mosques, the Seat of Chief rabbi with all its archive and 16 of the 33 synagogues. The printing-houses of most newspapers (Thessaloniki had the bigger number of published newspapers in Greece) most of which did not manage to republish. Approximately 4,096 of the 7,695 shops within the city were destroyed, leaving 70% of the workforce unemployed.
After the destruction of the city, insurance companies sent their agents to survey the extent of the damage within the city, trying to attribute the destruction in martial acts (also supported various rumours for arson by the Germans or the French). The insurance companies, in order to avoid the payback of enormous sums to their insurants, attempted to appraise the fire damage as accurately as they could. The total amount of insurance contracts was about 3,000,000 golden pounds. The majority of insurance companies within the region were British. The insurance company, North & British Mercantile Co., had to compensate 3,000 insurance contracts. The Court deemed the fire was caused by accidental reasons. However, under the pressure of Greek and foreign authorities along with the Court, all of the insurance policies were completely paid.
Only a few days after the destruction of the city, the Venizelos government announced that it would not allow reconstruction of the city. Instead a new urban plan would be considered, according to the Law 823/1917 that was prepared by Minister of Transports Alexandros Papanastasiou. Papanastasiou founded the "International Committee fot the New Plan of Thessaloniki" with chairman the French architect and archeologist Ernest Hébrard, which was to develop a new urban plan. It was delivered in the General Administration of Macedonia on 29 June 1918. The plan was not applied completely, and due to pressure by landowners , it suffered a lot of changes. Overall, the new plan was a big improvement in the previous setup of the city.