The blaze at the old Stratton Education Centre wreaked havoc and the fire service say the building is 'fully destroyed'.
The former education centre on St Philip's Road went up in flames just after 4pm yesterday.
Two final fire engines left the scene just after 10am this morning when firefighters had finished putting out the last hotspots.
A spokeswoman from Dorset and Wiltshire Fire and Rescue Service said: "On arrival, crews found a derelict building well alight, with a large amount of smoke issuing.
"Breathing apparatus wearers used hose reel jets, main lines and the aerial ladder platform to extinguish the fire but unfortunately, the property was fully destroyed. Our stop came at 10.54pm."
Two teenagers, 15 and 16, have been arrested on suspicion of arson.
The roof was engulfed in flames and the severe damage is visible from the street.
The derelict Victorian building, formerly a school, is surrounded by hoarding and has been vacant for between three and four years.
Workers were filling a gap in the wall of hoarding this morning with a wooden board.
People living in the area gathered outside the site to view the ruined building.
One man from the group was on his ladder when he first smelled the smoke. He was the fourth person to report the billowing smoke to the fire service.
He still has a cough this morning. He described how the smoke was so thick he couldn't even see his house from a few metres away.
"It's gutting. It was a lovely view but it's completely changed now. I just hope they don't demolish the building," he said.
He was happy with plans to turn the education centre into a flats because it meants minimal alterations to the external appearance of the building.
A woman, who used to be a governor of the school, said she burst into tears when she came outside and saw the flames.
She looked out of the window this morning and her view is now completely altered.
Another man told the Adver how much residents care about the area and how upset they were at the news.
"It was such a beautiful building and now it looks like an eyesore. It's a shame," he added.
"Who knows how long it's taking to take to fix that?"
Fire crews from Westlea, Marlborough, Stratton, Swindon, Cirencester, Fiarford and Faringdon rushed to the scene yesterday afternoon. An aerial ladder platform from Swindon was used to put out the flames.
The plans for the building, lodged by the borough council's own housing company, to turn the site into seven apartments and build 12 houses in the grounds have been controversial.
Planning permission has not so far been granted and objections were still being raised by residents this week.
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