About 750 people were celebrating at Neighbours in the 1500 block of Broadway when someone poured gas on the carpeted stairway leading to the second level of the bar, and ignited it, Seattle police said.
"I just remember how bright it was," said Neighbours patron Shaun Knittel who is also the founder of Social Outreach Seattle, an organization made of LGBTQ members who speak up for gay rights and social inequalities.
Knittel was shooting video of the drag queen performances at Neighbours on New Year's Eve but soon found himself getting video of the fire scene.
"I immediately turned around and there (was) a small fire and it just went up in flames," said Knittel.
A security guard later found a plastic gas container at the top of the staircase, according to Knittel.
Two patrons at an upper level bar used a fire extinguisher to put out the flames. Knittel interviewed the patrons as others were exiting the club and provided the video to KOMO. "We saw smoke and we could feel the heat in the ceiling," said one of the men who helped put out the fire.
As staff was trying to clear the nightclub, someone pulled a fire alarm that activated the indoor sprinkler system. The water damaged the interior of the nightclub and it's unclear when the business will reopen.
"Most people were kind of fine with it; though they were just kind of like 'What's going on? That's crazy," said patron Ethan Straight who returned to Neighbours on Wednesday to pick-up his credit card.
"Hopefully, if anyone knows anything, they give tips to the police so they can find someone who's trying to burn down a place with just a bunch of party-goers. Why would you do that?" said Straight.
Arson investigators are still searching for a suspect.
"It's not just a bar or just a nightclub. And whoever these jerks are there's going to be a good number that makes sure they will be prosecuted to the fullest extent of the law," said Knittel.