Wellington City Council spokesman Richard MacLean said the slip was "a biggie".
It was on the section of The Terrace between Ghuznee St and Buller St, he said.
"It's blocking the whole road and it looks like it has brought down a big concrete retaining wall," MacLean said.
MacLean advised motorists and pedestrians to stay away from the area.
Fenz district manager Nick Pyatt said two properties have been evacuated, but was unsure at this stage how many people were affected.
"We're awaiting the arrival of a geotech and structural engineering team who will monitor and assess the ability of the land to hold that building up there."
They were working with the city council to find accommodation for people, Pyatt said.
Pyatt estimated the slip was about 4m deep and fire crews were keeping a close eye on a large tree that had possibly been undercut.
A couple of gas pipes were severed when the landslide came down, but they have since been isolated, Pyatt said.