Two small trailers were destroyed by fire at the Dundas Street encampment Friday afternoon.
Several fire trucks responded to the fire, which happened shortly after noon.
A thick plume of smoke could be seen rising from the encampment from several kilometres away before it was put out.
There were no injuries reported and Waterloo regional police are now investigating.
Three pumper trucks and more than a dozen firefighters remained on scene following the blaze.
Police and fire officials have not said whether they consider the fire to be suspicious.
The site was taped off for the investigation.
