The fire was reported at 3:13 a.m. at 1255 E. Santa Clara St., which is the address of Wendy's Fabric & Lace, a party store in a strip mall on the corner of North 26th Street.
A second alarm was added at 3:25 a.m., San Jose fire Capt. Chuck Rangel said, and crews had the fire contained by 4:13 a.m.
There were no injuries, and the cause of the fire is under investigation.
A passerby spotted smoke coming from the building and reported the fire, allowing crews to respond quickly to the scene, Rangel said. Damage was contained to the one business and did not spread to a neighboring printing shop.
Rangel estimated that about 30 percent of the store's interior -- including its myriad contents -- sustained heavy fire and smoke damage. The fire department is working on contacting the business owner, he said.