NSW police have charged a 20-year-old man with arson after an old hotel was extensively damaged during a fire at Yass early on Monday morning.

At around 2am emergency services were called to the Commercial Hotel on Comur Street, Yass, following reports of a fire.

Fire and Rescue NSW extinguished the blaze, but the historic building was extensively damaged, while one neighbouring property received water damage.

The hotel, which was built in the 1840s, was vacant at the time and there were no reports of injuries. The Commercial Hotel closed its door in 2005.

Following inquiries and a public appeal for information, police arrested a 20-year-old man at a nearby address on Comur Street, on Monday afternoon.

The man was taken to Yass Police Station and charged with damaging property by fire or explosion greater than $15,000.