Horrified onlookers watched as flames of the 1,105 foot (337 metre), 79-storey Torch tower on Thursday night.
There is no word on casualties, but Dubai's government media office announced that residents have been successfully evacuated from the building. Some 30,000 buildings in Dubai alone are thought to have some form of cladding that can spread fire.
A fatal fire in London in June prompted authorities to order testing on the cladding used in British buildings.
"We were sleeping and we woke up to the fire alarm and people screaming". The fire slightly damaged the interior of the 83th and 84th floor.
The Torch Tower was damaged by an earlier blaze in 2015, which resulted in the evacuation of hundreds of people.
Building and safety experts have cited a popular type of cladding covering the buildings that can be highly flammable. Numerous tower's residents are European expats.
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Residents also received an emergency call from Torch Tower reception an hour after they had left to ensure they were safe.
It marks the second fire at the skyscraper in the world-famous Marina district, with an eerily similar incident two years ago.
Several building residents said the fire broke out just after 1 a.m.at the 86-story Torch Tower residential building, which had also caught fire just two-and-a-half years earlier.
Latest reports claimed that more than 40 floors were burning on one side of the residential tower.
About 70 percent of the high-rise buildings in the United Arab Emirates were constructed with the flammable panels, The National reported in 2012.
That fire, and other recent blazes in the city, spread quickly because of external cladding, according to fire engineering consultancy Tenable Dubai.