The blaze is burning on Montpelier Drive in The Oaks, which is about 15 minutes away from Camden.
The fire has jumped a gully at Sunnyside Creek and is heading for Sunnyside Road, where it is believed to be approaching homes.
The NSW Rural Fire Service first put out an advice alert for the out-of-control grassfire at 4.18pm.
Water bombing aircraft are being used to try and get the upper hand on the flames.
The fire is roughly eight hectares in size.