The blaze devastated the port city of Valparaiso, 75 miles north of the capital of Santiago, destroying some 100 homes and displacing more than 1,200 residents, The Santiago Times reported.
Police have arrested Carlos Rivas Quiroz, 27, who confessed to accidentally starting the fire with a welder's torch at the RVC construction company.
Quiroz said in a written statement that his manager pressured him into telling police he was painting instead of welding when the fire began.
Valparaiso Mayor Raul Celis said a collective effort was under way by the National Emergency Office, police, firefighters and hundreds of volunteers.
"To date, we have delivered 1,500 mattresses, 3,000 blankets, 3,000 servings of food, 600 hygiene kits and 16 chemical baths," Celis said.