The public are being urged to stay out of the water at Ahuriri Estuary after 1000 litres of hydrochloric acid was spilled in Napier.
Napier City Council said fire crews were working to neutralise the acid spill at Galvanising Hawke's Bay in Napier.
Emergency services were called to Thames St, Pandora, Napier, about 4.05pm.
Fire and Emergency New Zealand said an acid spill had occurred and fire crews are working to neutralise the spill.
Council said Thames St was closed and properties were being evacuated.
Four fire trucks, HAZMAT unit and a support vehicle are currently in attendance.
Hawke's Bay Regional Council urged residents to stay out of the water at Ahuriri Estuary until further notice.
"We've learned of a spill of 1000 litres of hydrochloric acid in the Thames St area, entering the stormwater system and into the Tyne St drain, which flows into Ahuriri Estuary," a spokeswoman said.
"We're currently focused on the incident and trying to limit any impact on the environment. An investigation into the cause will come next."
Signs were put up to warn the public of the spill.
Hawke's Bay District Health Board medical officer of health Dr Nick Jones said the public should avoid water contact in this area.
"Anyone suffering any related health-effects should contact Healthline on 0800 358 5453 or see their GP," he added.
HBRC's pollution response team and NCC's environmental solutions team were also called.