The How Do You Know actor's modest property in the 7300 block of Woodrow Wilson Drive became engulfed by flames at around 7pm yesterday, according to the Los Angeles Times.
Nicholson bought the house for $49,000 (£35,800) in the early 1970s and is still listed as its owner, although he has rented the residence out to a pair of actors in recent years.
About 85 firefighters responded to the blaze and two were later treated for unknown injuries. The inferno took over 90 minutes to put out.
"It was tricky, just because of where it was, on a hillside, dark, windy roads, a lot of brush," Matt Spence of the Los Angeles Fire Department said. "It's extremely dark up there."
Nicholson's residence is located just off the famous Mulholland Drive, and the Oscar winner owns three acres of property nearby.