CAL FIRE officials said firefighters made "good progress" on the fire and that forward progress has been stopped.
Just before 2 p.m., officials said the fire was 50 percent contained.
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The fire prompted evacuations from 18th Street to Highway 70 from Nelson Avenue to Grand Avenue in Oroville.
That evacuation order has now been downgraded to a warning.
Photos of the Nelson Fire show large plumes of smoke over the area.
An evacuation center is located at the Nelson Softball Complex in Oroville.
The fire was first reported around noon.
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Stay with ABC7 News for updates on this developing story