A burst water main in downtown Queenstown has sent thousands of litres of water flooding down the resort's main street.
The pressure from the water caused the tiled ground in The Mall to rupture in several places.
Queenstown Deputy Chief Fire Office Andrew Bary said there was a danger it had created sinkholes.
The Mall was likely to be closed for some time, from near Reading Cinema down towards Lake Wakatipu. Queenstown Lakes District Council officials and Veolia workers are due on scene.
At least one business, Pog Mahone's Irish pub on adjacent Rees St, was partially flooded.
Two fire crews were called about 7.15pm. They closed three streets.
QLDC General Manager Property and Infrastructure Peter Hansby said contractors had shut off the water to assess the damage and start work on fixing the fault.
Rees St was closed to traffic and it was likely that water in the immediate vicinity would remain off overnight.