Two witnesses told AFP they heard an explosion and saw a plume of smoke rising from Dubai's famed man-made island The Palm as authorities reported four injured The Palm.
The attack came as Iran carried out retaliatory strikes in the oil-rich Gulf following US and Israeli attacks -- rattling a region long seen as a haven of peace and security.
One of the witnesses said he saw thick black smoke rising from a hotel on the Palm and heard ambulances rushing towards the scene.
The Dubai media office later confirmed an "incident" in a building in the Palm Jumeirah area that resulted in a fire and four people injured.
"Dubai Civil Defence has confirmed that the resulting fire is now under control. Four individuals sustained injuries and have been transferred to medical facilities," it added.
The incident targeting a Dubai landmark shocked residents, and was followed by several bangs heard by Dubai residents and AFP correspondents in the city.
Roughly 90 percent of the UAE's population consists of foreigners and Dubai is its most populated city, long associated with opulence and glamour.
Iran launched strikes on all the oil-rich Gulf countries except for Oman, a mediator in the US-Iran talks.