Authorities are investigating a fire that damaged an Islamic community centre in Melbourne's north early today.

Police have established a crime scene at the Islamic Community Centre in Fawkner, after it was engulfed by flames about 2.36am AEDT.

Footage shows “Islamic State” graffiti sprayed on the side of the burned building.

"Islamic State" graffiti was sprayed on to the side of the building. (9NEWS)

Despite the tagging, locals said they “do not believe” the incident had ties to ISIL, but to an ongoing dispute in the community.

9NEWS understands it is the third time the centre has been targeted this year, with fire crews called to the property two weeks ago.

Regular visitors to the Islamic centre, which teaches children Arabic, said they were “very sad” about the incident.

“We’re very sad, this is our place. We come here every week,” a local man, who requested not to be identified, told 9NEWS.

“It’s a place for the community... it’s our home,” he added.

Fifty firefighters helped battle this morning’s blaze as it continued to spread and threatened neighbouring properties.

It took them about an hour to extinguish most of the fire.

"The fire crews did a great job," a Metropolitan Fire Brigade spokesperson said.

Investigations are ongoing.