Fire department officials said the fire began shortly before 1:30 a.m. Friday and that when crews arrived people were evacuating the building.
"We started to experience building collapse relatively quickly. Especially in the roof section and then it just started dropping down from there," Deputy Fire Chief David Daniel said.
Officials said fighting the fire was difficult but not because of the cold temperatures. They said the structure of the building made it hard to battle as well as other factors.
"We also had problems with water supply from our hydrant system. Because we were using so much water, we had to have multiple hydrants," Daniel said.
Parts of Central and Brunswick streets were closed off temporarily because of the fire.
Old Town firefighters were assisted by crews from several nearby communities.
Officials said there is evidence that the fire had been smoldering for awhile but the cause has yet to be determined.
Residents are being assisted by the Red Cross. The state fire marshal's office is investigating.