The fire broke out at a home on Power Street in St Albans about 2.40am today.
Firefighters worked for almost an hour to bring the blaze under control.
Once the flames were extinguished the body of a man, who is yet to be formally identified, was found inside.
Neighbours this morning have woken up in shock to the news.
”I couldn’t believe what happened… I saw all the ambulance, police, everything coming here,” one resident told 9News.
“It’s very sad because he’s very friendly and when we know about our friend, like he’s going through this situation we feel very bad,” said another neighbour.
Despite the best efforts of fire crews, the flames spread to a nearby three-storey building forcing some residents to seek temporary accommodation.
Police said a crime scene had been established and would be examined by an arson chemist later today.
Anyone who witnessed the incident or with information is urged to contact Crime Stoppers on 1800 333 000.