Police are investigating a suspicious fire at an iconic inner Sydney hotel.

Emergency services were called to the Lansdowne Hotel, in Chippendale, shortly before 8am on Friday, where they found the third floor alight.

Fire and Rescue NSW personnel were able to successfully extinguish the blaze before police set up a crime scene.

Forensic officers are now combing the area in an attempt to establish the circumstances surrounding the fire.

Police said the fire is believed to have started on a balcony, and is being treated as suspicious.

Anyone with information that may assist investigators should contact Redfern Detectives or Crime Stoppers on 1800 333 000.