The spokesman for the Mashhad fire department said the blaze erupted at a bitumen workshop serving one of the shrine's construction projects.
Firefighters stationed at the shrine and operational teams from the municipal fire service were on the scene immediately and worked to prevent the fire from spreading to adjacent areas.
The fire produced extensive smoke but was brought under control in a short time thanks to the swift response. There were no reports of casualties or damage to shrine buildings. The cause of the fire is under investigation.
The Imam Reza shrine in Mashhad is one of the holiest sites in Shia Islam and draws millions of pilgrims annually.