Crews from Bognor Regis, Littlehampton, Chichester, Worthing, Petworth and Southsea have been tackling the fire since before 5.40am.
Firefighters remain at the scene.
According to traffic reports, Downview Road is closed both ways between B2259 Felpham Way and Wroxham Way.
A spokesperson for West Sussex Fire and Rescue Service said: “We were called at 23.48pm last night to a fire at a thatched roof property in Downview Road, Felpham.
“Two pumps from Bognor Regis, two pumps from Littlehampton, two pumps from Chichester and two pumps from Worthing attended, along with aerial ladder platforms from Worthing and Southsea.
“At 4am, Joint Fire Control were informed that there were still five pumps on scene and one aerial ladder platform.
“The latest update is that there are now two pumps on scene and there is a partial road closure along Downview Road, so we are advising people to find alternative routes where possible and allow extra time for the school run this morning.”