The 5-acre blaze, dubbed the North Shore Fire, was reported Friday evening and quickly flared up before firefighters brought it under control.
Fire managers reported Saturday afternoon the fire is 35 percent contained and that more than 100 firefighters were involved in battling the blaze. Two helicopters were staged nearby and are available to provide assistance if needed.
Kay McKellar of the incident management team says the fire is human-caused and started on the lake's shoreline.
It destroyed three summer cabins and caused major structural damage to a private home.
One of those who lost his cabin is Ross Kavanaugh. He said he fled when he saw a huge "firewall" approaching.
"There's absolutely nothing left," he said in an interview with KOMO News. "I don't know what I'm going to do, actually, you know - first off, probably buy a new razor and a new wristwatch. ... I wasn't really ready for Armageddon."
Firefighters spent much of Saturday reinforcing fire lines and extinguishing hot spots. They were also mopping up the fire and using infrared equipment to detect hot areas.
Firefighting efforts were being hampered by a large number of dead standing trees in the area, said Roland Giller, spokesman for the Okanogan-Wenatchee National Forest.
North Shore Road remained closed Saturday afternoon west of Brown Road to the old ranger station on the lake's north shore. Highway 207, also known as the Lake Wenatchee Highway, remains open.
The affected area is located about 14 miles north of Leavenworth in the Okanogan-Wenatchee National Forest's Wenatchee River Ranger District.
The area has many summer homes on land managed by the U.S. Forest Service and leased to permit holders who have cabins near the lake, like the three summer cabins destroyed by the fire.
The Chelan County Sheriff's Office has advised residents near the fire they are under a Level-1 evacuation notice that advises them they should be aware of the danger that exists and monitor local media outlets for further information.
Forecasts show winds up to 10 mph and maximum temperatures in the low 90s are expected on Saturday.