The fire broke out in the second-floor flat of a four-storey block in Market Square on Thursday afternoon.
Five fire crews attended, and the fire service said three people were rescued.
They were treated by paramedics.
Eyewitness Damian Lewis, 55, from Wolverhampton, said: "I got off the bus and saw the smoke up the side of the building, the fire crews were still working on putting it out. I did see one person getting taken out who looked at being in a bad way.
"I heard that there were two other people who were taken from the fire. I hope they were all right."
Michael Wright, 34, also from Wolverhampton, added: "There was quite a bit a smoke when I got here, I didn't see anyone being bought out but I saw the firemen putting the fire out.
"I was surprised at how fast the emergency services got here. It was quite fast."
A spokesperson for West Midlands Ambulance Service, said: "We were called by the fire service at 2.57pm to a fire at a property on Market Square, Wolverhampton.
"One ambulance, two paramedic officers and the Hazardous Area Response Team attended the scene."
West Midlands Roads confirmed that Salop Street was closed as a result of the fire incident, and urged drivers to allow extra time for their journeys.
West Midlands Fire Service has been contacted for more information.