Many made panicked phone calls to triple zero just before 10pm on Sunday as smoke filled the two-storey building in Mangan Street, Balwyn.
Some residents were unable to leave their homes because of the smoke and were heard coughing while on the line to emergency services operators.
Firefighters rescued 14 people, including seven from balconies.
Fire Rescue Victoria Commander John Dakis told ABC radio the scene was chaotic.
"Some of the residents were extremely lucky, we were getting calls through triple zero on scene informing us that there were residents trapped in certain apartments," Mr Dakis said.
All residents were ultimately evacuated and the Department of Families, Fairness and Housing has put up 14 in hotel accommodation at Kew in Melbourne's east.
The remaining residents found their own accommodation after their homes were badly damaged.
"They won't be coming back in this building in the near future," Mr Dakis said.
The facility was fitted with sprinkler-protected fire safety systems and smoke alarms.
The department thanked firefighters who rescued residents from the building.
"The Department of Families, Fairness and Housing is supporting all residents to ensure they are looked after and have a place to stay until it is safe to return," a departmental spokeswoman said.
One person was treated for smoke inhalation and another taken to hospital with chest pain.
No one was seriously injured and all people living at the residential care facility have been accounted for.
Detectives are treating the fire as suspicious and the circumstances surrounding the blaze are under investigation.
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