The Goblin Fire in the San Juan National Forest north of Durango spread to an estimated 525 acres Thursday.
As the fire advances in steep, rocky terrain that prevents efforts at containment, firefighters are building a line around two cabins and two outbuildings about three-quarter of a mile down the Animas River from the fire.
The fire covered 110 acres Tuesday and 350 acres Wednesday.
Fire managers think the fire was sparked Saturday by an ember from a Durango & Silverton Narrow Gauge Railroad locomotive.
Smoke from the fire was visible from the north Animas Valley on Wednesday.
Four U.S. Forest Service firefighters are keeping the fire away from the Animas River and the railroad track, agency spokeswoman Ann Bond said.
The railroad has seven firefighters on standby, she said. The fire has spread upslope, and it is now burning into the West Needles portion of the Weminuche Wilderness.