Emergency services were called to the area of Park Street shortly before 3pm on Wednesday. The fire is understood to have affected Betts Metals in Park Street.
Clouds of black smoke could be seen 10 to 15 miles away across the Black Country.
About 100 firefighters from around the region were sent to the site and by 6.30pm the fire was surrounded.
Everyone who was onsite was evacuated safely, a Hereford and Worcestershire Fire and Rescue (HWFRS) spokesman said, and they expect to be working overnight.
A statement said: "Around 20 fire appliances and around 100 firefighters are at the scene as well as multi-agency partners from Shropshire Fire and Rescue Service, Staffordshire Fire and Rescue Service, West Midlands Fire Service, West Midlands Ambulance Service and West Mercia Police.
"The fire is in two large industrial units and there are several seats of fire.
"Residents have been evacuated and are being requested to stay away overnight with friends/relatives if possible or there is a rest centre at Wyre Forest House.
"Kidderminster people are asked to keep their doors and windows closed and avoid the area if at all possible as traffic is still very heavy.
"Firefighting is expecting to continue overnight."
Plumes of spoke could be seen across the town. Police have urged people to avoid the area.
Kidderminster: Park Street— West Mercia Operations & Communications Centre (@WestMerciaOCC) September 8, 2021
There is a large Industrial fire in the area of Park Street. @HWFRS are on route.
Likely to be considerable disruption so please avoid the area.@OPUWorcs @KMinsterCops @WyreForestDC pic.twitter.com/UGN4bUPdHY
A West Midlands Ambulance Service spokesman said: "We received a call from the fire service reporting a large fire in Park Street, Kidderminster at 2.53pm today (Wednesday).
"We currently have an ambulance, three paramedic officers, Hazardous Area Response Team (HART) paramedics and the Midlands Air Ambulance from Strensham with a MERIT trauma doctor and critical care paramedic on board at the scene."
Park Street with Park Lane and Castle Street is currently closed, as well as Bewdley Road by Kidderminster Hospital.
A spokesman for West Mercia Police said: "Other road closures going in place, so please avoid the area, and keep windows closed."
More information to follow.