In horrific footage, the entire building Fagersjo, Stockholm can be seen engulfed as firefighters battle to put out the blaze.
37 residents were evacuated as the fire tore through the building in the early hours of Sunday.
Police said they had begun a preliminary arson investigation but that they currently had no suspects and were unaware of any threats against the asylum centre.
Sven-Erik Olsson at the Stockholm police”s central dispatch unit said: “We will now see if anybody in the area may have seen something.
“The technical investigation of the scene will begin [on Monday].”
It is feared to be an arsonist attack, after staff at the centre reported on Friday night that someone had attempted to set the building on fire as oil canisters were found left in an oven on the premises.
Luckily the on-duty staff were able to stop any blaze from erupting.
Sweden took in a record 163,000 asylum seekers last year, the most of any European country relative to the size of its population, before a government clamp down saw the numbers fall sharply.
The fire comes as the Scandinavian country has been plagued with unprecedented levels of crime as cars burn across the nation.
In Malmo, Sweden’s third largest city, more than 70 cars have burned out since July.
The increased levels of crime have forced the country’s police to place more than 50 areas on a “no-go” list.
In February Express.co.uk reported the Scandinavian country has seen a huge surge in crime since the start of the migrants crisis in Europe with a rise in sex assaults, drug dealing and children carrying weapons.
At the time around 50 areas were put on a “blacklist” which are then divided into three categories from “risk areas” to “seriously vulnerable”.
The figure has now been increased to 55 as the Swedish police force are facing a crisis, with three officers handing in their notice every day.