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The Duck Creek Pilliga Forest bushfire was burning about 20km south of the town of Narrabri - home to more than 12,000people - and a similar distance from Boggabri to the east on Tuesday morning.
The fire had burned through more than 130,000ha and authorities warned embers from the blaze were being blown well ahead of its front, causing a danger to homes.
“Overnight the fire generated a thunderstorm (pyro-cumulonimbus) to the southeast of the fireground, causing dangerous and erratic fire behaviour,” the NSW Rural Fire Service said.
NSW Rural Fire Service firefighters carry out a back burning during bush fire at West Wallsend on December 14 in Newcastle, Australia. Photo / Getty Images
Residents of Baan Baa, Willala and Goolhi were told their lives were at risk and it was too late to leave, and they should seek shelter and avoid being caught in the open in the path of the fire.
Evacuation centres have been set up at Narrabri and Gunnedah.
Smoke from the fire on Monday could be seen across an area spanning hundreds of kilometres including Tamworth, Walcha, Armidale and even coastal communities near Port Macquarie.
There were 63 fires burning across NSW on Tuesday morning, including 15 that were yet to be contained.