The multi-alarm fire broke out at 2:30 a.m. Tuesday and burned through two construction sheds located two floors beneath ground level.
More than 100 firefighters responded to the scene as heavy smoke filled the concourses serving the A, C and E subway lines.
There were no immediate reports of injuries.
Penn Station remained open during the incident, but the A and E subway trains were bypassing 34th Street station.
NJ Transit and Amtrak trains continued to run on a normal schedule Tuesday morning.