The shock new storyline will see a blaze rip through a row of cottages in the heart of the village in some of the soap's most spectacular scenes ever.
Show bosses have confirmed that at least two characters will perish in the inferno, although the identities of the casualties will be kept closely under wraps until transmission.
Betty Eagleton (Paula Tilbrook), Chas Dingle (Lucy Pargeter) and Gennie Walker (Sian Reese-Williams) are just three of the villagers who have been named as possible victims of the flames.
Brenda Walker (Lesley Dunlop) and Terry Woods (Billy Hartman) will also be in danger when the fire spreads to their home, while Viv Hope (Deena Payne) is another show favourite whose life may be left on the line.
In a further twist, the aftermath of the blaze will see the distressing discovery that the fire was no accident. As the survivors mourn the dead, they must deal with the disturbing realisation that an arsonist has struck and could be among them.
Speaking of the storyline, Emmerdale's series producer Gavin Blyth commented: "This is going to be one of the most dramatic and tragic events ever to rock Emmerdale and no-one will be untouched by the fire's devastating consequences.
"The whole village will be thrown together for these gripping and heart-wrenching episodes which will launch us into an unmissable 2011."
Emmerdale's arson plot will air in the middle of January.