When the fire alarm bell sounded it could be heard throughout town. Until the City purchased its own horses for the Fire apparatus teamsters would, at the sound of the bell, race for the two steamer stations. The first to arrive would hitch his team to the apparatus and respond. Since the man who owned the horses was compensated for their use, there was never any delay getting the steamers to fires. All other apparatus remained hand‑drawn.

Two hose companies had been added to the volunteer department. Hose No. I was quartered with Engine I on Columbia Street and Hose No. 7 took over a room in the old North School at 3rd Avenue and Pine Street. No major changes had taken place in the water supply. It had been extended into more streets and some fire hydrants had been installed, but the pressure and the quantity of water were still low.

The inadequacy of a small volunteer fire department in a city of Seattle's size was demonstrated in February of 1887 when the Central School, a three‑story wood‑frame structure at 7th Avenue and Madison Street, was destroyed.

The Belltown Hose Company No. 4 came into the Department in February 1889. Also that year a 65‑foot Preston aerial ladder truck was purchased and stored, but never put in service. Josiah Collins had replaced Gardner Kellogg as Chief of the volunteers on May 13, 1888, but Chief Collins was on a business trip in San Francisco on June 6, 1889, when about 2:45 p.m. a glue pot boiled over, starting a fire in McGough's Cabinet Shop in the basement of the Pontius Block, a two‑story wood‑frame commercial building on the southwest comer of Front and Madison Streets.

Thus began the Great Seattle Fire. The older wood buildings were tinder dry as the fire came on the heels of a prolonged dry spell. The tide was low making it difficult for the steamers to draft from the bay. Only inadequate hose streams were available and those were used from the street, waning for the fire to burn to them instead of being taken to the basement areas under the buildings, which were accessible due to the tide. It was not long before Frye's Opera House across Front Street ignited, and the blaze was on its way. Mayor Robert Moran took command and ordered dynamiting of buildings in the path of the fire, The steamers were moved back to 3rd Avenue and Yesler Way. A judge hearing a murder trial at the King County Courthouse at 3rd Avenue and Jefferson Street adjourned the trial so the jury and spectators could team up and, using wet burlap sacks on the Courthouse roof, they saved that building.

Luck and hard work kept the fire from crossing 3rd Avenue. Thirty‑one square blocks of the commercial heart of the City had been destroyed by 9:30 that night, when the fire burned itself out at the water's edge. Loss was estimated between $12 and $16 million. During the course of the Fire, help was received from the fire departments of Tacoma, Olympia, Snohomish, Port Townsend, and Bellingham in Washington, and also Portland, Oregon, and Victoria, British Columbia, in Canada.

In the Fire's wake, the insurance industry charged the City with having provided an inadequate water supply, an inadequate Fire department, and poor training for the fire department that did exist. The volunteers from Stations I and 2, which were destroyed, were moved into a temporary frame shed with a canvas roof on University Street between 3rd and 4th Avenues. Most of the fire fighters quit the organization in disgust at the charges. Chief Collins himself resigned on July 10. Jack McDonald who also quit in September replaced him. The result of the fire and the ill will, which followed it, was the creation of a paid, professional fire department. The City Council passed Ordinance No. 1212 on October 17, 1889, creating such a department. On October 22, Gardner Kellogg was selected to be the Chief. He spent the next several days in the temporary headquarters interviewing candidates for positions in the new department. Many were former volunteers. Thirty‑two men were hired and went into service on a single‑platoon basis at 8:00 a.m. October 26, 1889.

Engine Companies I and 2 were quartered in the temporary wood and canvas headquarters on University Street along with Truck Company 2, which went into service with the unused Preston aerial ladder truck of the volunteers. Hose No. 4, operating out of rented quarters on Battery Street near Front Street in the Belltown district, was also a paid company. On December 12, 1889, a new company, Chemical No. 1, went into service in a warehouse at Western and Spring. The apparatus was a new Champion chemical wagon with two 80‑gallon soda‑acid chemical tanks and 200‑feet of one‑inch chemical hose on a reel. Two new Ahrens 700 gallon‑per‑minute steam pumpers had arrived and were stored in the warehouse with Chemical I awaiting the building of new stations and the creation of new companies.

Fire fighters at headquarters were likely most anxious to see the permanent stations completed. The winter of 1889‑90 was cold and wet, and the canvas roof leaked badly. The men and their horses were ill much of the time.