The explosion is at Fleetwood Nursing Home in Grange Road, and two people are reported to have been injured.
Members of the public have reported hearing a loud bang and seeing yellowish smoke.
Fire crews from Bispham, Blackpool, Bamber Bridge and Fleetwood have been called to the scene along with police, and the Air Ambulance had landed nearby.
A Lancashire Fire and Rescue spokesman said: "Police quickly ruled out foul play and it appears to have been a gas cylinder on the premises that has exploded, injuring two people, shattering windows in a conservatory and inflicting structural damage to the building."
Grange Road is currently closed, along with several other adjoining roads, and drivers are advised to avoid the area.
Several bus routes have also been diverted. Blackpool Transport tweeted: "Due to police activity at West View roundabout the service 1 and 14 are diverting, service 1 from Rossall to Amounderness Way , service 14 from Eoros roundabout to Amounderness way to Fisherman's Walk then back to Lord Street."
Police say the incident is not terrorism related.