Three fire crews were called to Glandon Garage on Caernarfon Road at 2:30am after the alarm was raised.
Crews from Pwllheli, Porthmadog and Nefyn spent more than an hour tackling the flames.
A double decker coach was left completely destroyed.
Flames also spread to a single decker coach, that was parked adjacent, causing significant damage to that vehicle also.
No one was injured.
One eyewitness said: “I was waken up by a big explosion.
“Very quickly there were emergency vehicles at the scene, but it was quite scary at the time.”
A spokesman for the North Wales Fire and Rescue Service said: “We were called at 2:30am following reports of a fire on Caernarfon Road in Pwllheli.
“One double decker coach had sustained 100% fire damage, with a single decker coach receiving 70% fire damage.
“The crews were able to leave the scene at 3:56am.”
Daily Post reporter Amelia Shaw, who lives nearby, added; “The fire took place not far from a collection of Calor gas bottles.
Watch car on A55 turn into fireball as it tows caravan
“Thankfully, they did not catch fire or it could have been much worse.”
Police and fire investigators returned to the scene this morning as they try to establish the cause of the blaze.
Source. Daily Post