The fire started at Punty Lane in Shoreham, near the junction with Tucks Road, in a timber plantation before spreading into nearby grassland.
More than 30 fire trucks worked on the blaze, along with air support.
Temperatures at Shoreham reached 36.2 degrees, with winds gusting at up to 43km/h, according to the Bureau of Meteorology.
Firefighters trying to contain a bushfire at Shoreham on the Mornington Peninsula. Credit:Moorooduc CFA/Facebook
Marcus Coggin from Nobbies View Drought Tolerant Plant Farm in Shoreham said about 3pm their business was located between Shoreham and Flinders.
"We're quite safe where we are, it's travelling in a southeasterly direction, effectively away from the position we are," he said.
"There's a lot of air activity, waterbombing, plenty of fire trucks."
He said he could see smoke in the distance but it wasn't thick or moving in his direction.
However, he said the area where the fire was burning was near the old township of Shoreham.
"It is [populated], fairly heavily treed, all unmade roads, a lot of permanent residents there in weatherboard homes, smaller cottages and larger size homes so it is fairly heavily populated. I'm guessing people have had plenty of warning to evacuate."
Resident Fraser Ross, who runs the Salty Surf School in Shoreham, told ABC Radio he was teaching a group of children at the beach when the warning came through.
They ended the class quickly and got the kids out of the water. Mr Ross was evacuating the area with his family.
"We were reasonably prepared, the area is pretty susceptible to bushfires so we had all our stuff ready to go," he said.
"You could see the smoke and helicopters going back and forth from the water and are dropping water on the fire and it looks like, as far as you can see from a distance, like they have it under control. There is less smoke than an hour ago."
Simone is a breaking news reporter for The Age. Most recently she covered breaking news for The Australian in Melbourne.
Liam is The Age and Sydney Morning Herald's science reporter
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