Police and fire investigators are waiting to examine the scene of a fire which destroyed two holiday homes in Byron Bay overnight.

Emergency services were called to a fire at a home shortly before 7.30pm and found the building, in Brownell Drive, Wategos Beach, well alight.

Surrounding homes were evacuated as a precaution.

About 9.30pm the prevailing wind changed direction and a house next door also caught alight.

Despite efforts, both homes were destroyed by the blaze.

Police have been told the homes have a combined value of $5 million.

A third home in the street also suffered minor damage. No homes were occupied at the time.

The cause of the fire is still to be determined.

A guard was placed on the site overnight and, if safe, the scene will be examined later today.