Footage of the blast shows a fireball erupting into the sky above the building where a large fire could already be seen on the roof.
The building on the La Doua campus in Villeurbanne, north of Lyon city centre, is a science library.
The area has been evacuated and firefighters are on the scene.
Police told Reuters works were being carried out on the roof and the fire began after a gas bottle exploded.
The university told AP construction work was the cause and the explosion was “accidental”.
Authorities in the city and university insisted there were no risks of chemical leaks.
The incident comes days after a blast apparently caused by a gas leak hit a Paris bakery, killing four people and injuring several.