Some 115 people were moved out of a campsite and another 50 from a residential area at Hyères, south-east France, after the fire broke out at about 10.00 pm on Saturday night.
About 430 hectares have gone up in flames, according to local officials.
More than 400 firefighters, assisted by water bombers, were battling the blaze on Sunday morning.
Several roads, as well as a high-voltage power supply, have been cut off at the request of the fire department.
The Mistral wind died down during the night but gusts of 40-60 km/h could spread the fire again, officials warned.
Prosecutors in Toulon have opened into an inquiry, saying they have clues that indicate that the fire was deliberately started.
Several less serious fires also broke out on Corsica on Saturday and forecasts of strong winds and dry weather meant a high risk of new flare-ups on the brush-covered mountainsides on Sunday.
Wildfires in July destroyed several thousand hectares of vegetation in the south of France and Corsica, closing in on tourist destinations such as Saint Tropez.