"Due to the fire and water damage, this will impact on acute services," said Steve Crew, hospital manager.
"Over the weekend, all sick acutes will go to Hutt Hospital, our sister hospital."
Some elective surgeries may also be transferred there, Mr Crew said.
Because the hospital has a staged evacuation system, admitted patients were protected behind smoke-stop doors.
Nobody was injured but three patients had to be moved because of the smell of smoke, said Mr Crew.
He didn't yet have the firm number of patients likely to be transferred to Hutt Hospital.
All the contaminated equipment was sent to Hutt Hospital to be cleaned and sterilised.
The rest of Wairarapa Hospital, including the emergency department was functioning as usual and patients could be flown out if necessary, Mr Crew said.
Masterton Fire Service station officer Kevin Smith said smoke from the fire had filled quite a large area and had to be contained.
"Luckily it was quite a distance from patients and staff."
The steriliser works by subjecting equipment and supplies to high pressure, high temperature steam.
In this instance, it had overheated, said Mr Smith.
"There were two sterilisers, one of them overheated and an electrical fault meant the thermostat failed to turn off and it kept heating until it caught fire," he said.
"All the sterile supplies were contaminated by soot."
Mr Smith said there had been a major clean-up, mopping up water from the sprinklers and extracting smoke.
Crews worked from 2.15am until 4.30am.
Mr Crew said most of the area had been cleaned up by late Friday morning.
An assessment of the steriliser would soon be done.
He said he wasn't exactly sure when the hospital would return to normal but hoped it would be Monday.
That depended on the steriliser manufacturer, said Mr Crew.
