The Orroral Valley fire has been raging south of the capital and has destroyed 18,000 hectares of land so far, reports Efe news.
This is the first time in 17 years that a state of emergency has been declared in the city of 400,000 inhabitants.
"The declaration of a state of emergency is the strongest signal we can send to the ACT community to prepare themselves, and their family, for the worst possible situation," a statement by ACT Chief Minister Andrew Barr said.
"This fire will grow, and it may become unpredictable, and uncontrollable," it added.
The measure will remain in place "until the city is no longer at significant risk from this fire".
Minister for Police and Emergency Services Mick Gentleman said in the statement that the emergency services and defence and police forces had been doing a lot of preparation work to keep Canberrans safe in the case of an extreme emergency.
"A lot of planning has been done to try and protect Canberra homes if required. We are asking the community to remain vigilant and to listen to the advice of emergency personnel," he said.
Australia's Bureau of Meteorology has forecast an increase in temperatures to up to 40 degrees Celsius as well as strong winds, which could worsen the fires.
More than 80 bushfires continue to rage in the Australian states of Victoria and New South Wales, which have been the hardest hit.
Since September 2019, bushfires in the country have claimed the lives of 33 people and laid to waste an area greater than the size of Syria - 180,000 square kilometres.
These fires, which experts say have been more intense this year due to global warming, have so far emitted 400 megatonnes of carbon dioxide into the atmosphere, an amount equivalent to the country's average annual emissions, according to the global environment monitoring programme Copernicus.
The fire season in Australia is still peaking given that summer in the country ends in March and temperatures will remain high.
( With inputs from IANS )