Funeral home William Barrett and Sons has confirmed the fire reported on Bussell Highway this morning is within its building.
It is understood the fire has been contained to the garage and the mortuary and chapel are not affected.
Due to the fire at the premises, three funerals have had to be moved to different locations.
The funeral for Mr Brian Dyson will now be held at 11am at the St Mary's Family Centre, while the funeral for Mr Ron Baker at 2.30pm will be at the Busselton Yacht Club.
The funeral for Mrs Marlene Robson will be held at the Busselton Cemetery at 11am.
The Department of Fire and Emergency Services has urged the public to avoid Bussell Highway between King Street and Bay View Street as firefighters work to control the fire.
The fire in West Busselton was first reported about 6.30am on Friday, February 14, and has since been contained but is not controlled.
Bussell Highway between King Street and Bay View Street has been closed.
According to emergency services personnel, there is a lot of smoke in the area being blown in a westerly direction towards the coastline, but there is no direct threat to lives or homes.
As a precautionary measure, people in the area are being told to remain inside, out of the smoke or fumes, with doors and windows closed.
People with medical concerns should contact their local doctor or call Health Direct on 1800 022 222.