Around 50 firefighters tackled the blaze on Commercial Road, Horseley Fields on Saturday night as more than 400 pallets went up in flames.
The fire also spread to a nearby scrap yard, with a number of cars set alight.
Crews were at the scene for more than six hours as they battled to bring the blaze under control.
Firefighters returned this morning morning to damp down the fire-damaged pallet yard.
Crews were called to the scene at around 8.30pm and remained until 3am.
It is not yet known how the fire started.
Watch Commander Tony Bucknall, from Wolverhampton Fire Station, said: "The fire started in the pallet yard and spread to the scrap yard. We had seven appliances there.
"It was quite a large fire. There are 4,000 pallets in the yard and 400 were involved.
"It spread to some of the cars in the scrap yard next door and we contained the fire to stop it spreading."
Wolverhampton Fire Station tweeted: