The fire was discovered around 9 pm in a warehouse belonging to the recycling center in Ulm, in the German state of Baden-Württemberg, police said.
About 300 firefighters were called to the blaze but could not prevent it from spreading to several thousand square metres of balls of recycled paper stored in the warehouse, police said. Firefighters did prevent fuel stored in another warehouse from also going up in flames.
One fireman sustained minor injuries, and firefighters were still working to extinguish the flames on Monday morning.
Neighbors were asked to close their doors and windows as a plume of smoke drifted over the city, but authorities said toxins in the smoke did not present a significant danger.
Police are still investigating the cause of the blaze.