The incident triggered panic among motorists on the busy Sarjapur main road.
"Usually, a pile of garbage strewn around the lake is set on fire, but yesterday it caused a scare among residents and motorists as the smoke started billowing and surrounding the lake in the evening," K U Ramesh, Deputy Director at Karnataka Fire Department, said.
The fire was doused in half an hour, he said.
The area, for a while, was enveloped by huge clouds of smoke, he said.
Residents hit out at the Bruhat Bengaluru Mahanagara Palike (BBMP) officials for their "lackadaisical" attitude to stop dumping of garbage.
Karnataka State Pollution Control Board Chairman Lakshman said notices have been issued to the BBMP, Bengaluru Water Supply and Sewage Board and other agencies to stop the dumping. He also said the board is in the process of inspecting sewage treatment plants in the area.
The lake has been in news for the last one year for spillover of froth and toxic fumes.