The fire is burning near the Sunol Valley Water Treatment Plant and Haynes Gulch.
Crews say the fire is about 30 acres and 10 percent contained. It is moving uphill, and fire officials say, the "wind is very favorable to stop the progress soon."
SKY7 shows thick smoke swirling in the area. Residents as far as Oakland tell ABC7 News they can smell it.
No evacuations have been ordered at this time.
VIDEO: SKY7 flies over smoky grass fire in Sunol
Crews battling grass fire near water plant in Sunol
Stay with ABC7 News for the latest details on this developing story.