In a statement, Lancashire Police said: "Lancashire Constabulary and Lancashire Fire and Rescue are carrying out a joint investigation into the cause of a fire at Winter Hill near Bolton.
"Fire crews continue to tackle the blaze which broke out yesterday afternoon (Thursday).
"The origin and cause of the fire remain unknown.
"One man, aged 22, from Bolton, has been arrested on suspicion of arson with intent to endanger life."
Fire crews will work throughout the night to prevent a moorland fire spreading in Winter Hill, Lancashire Fire and Rescue said.
The service added 15 fire engines are on the scene after the blaze broke out on Thursday.