Photo: The Canadian Press. All rights reserved.

People watch a fire burning from the Highway 41 overlook on the way north into Oakhurst, Calif., Monday, Aug. 18, 2014. The fire is burning north of the community. (AP Photo/The Fresno Bee, Eric Paul Zamora)

 A wildfire northeast of Bakersfield burning in steep terrain has destroyed eight homes and 10 other structures, authorities said, but residents of some 200 homes under evacuation orders were allowed to return home Wednesday evening.

The blaze near Lake Isabella was 15 per cent contained after scorching about 5 square miles, Kern County Fire Capt. Derek Tisinger said. Firefighters working in drought conditions continued building containment lines after stopping the spread of the flames, and danger remained.

"There's still huge potential here, especially with the dry weather," Tisinger said. "We're not out of the woods yet."

Eight single-family homes and 10 outbuildings have been destroyed since the fire broke out on Monday, he said.

All evacuation orders and road closures were cancelled at 4 p.m. Wednesday, the U.S. Forest Service said in a statement.

The cause of the fire about 50 miles from Bakersfield was under investigation.

To the north, the remaining residents evacuated because of a wildfire that led to mass evacuations near Yosemite National Park were allowed to return to their homes Wednesday.

"We're at the point where we're turning the corner with the progress we had last night and yesterday," state fire spokesman Chris Christopherson said.

The flames drove about 1,000 people from their homes around Oakhurst, a community of several thousand in Madera County. Roughly 400 evacuees were allowed to return on Tuesday, with the rest given the green light to return on Wednesday morning.

The fire has burned about 1 square mile and was 65 per cent contained. It started on Monday and quickly took off because of strong winds and tinder-dry conditions.

Fire officials reported the destruction of an additional structure, bring the total of number of structures destroyed to nine.

Two firefighters suffered minor injuries. The cause of the blaze was under investigation.

A road leading visitors to the park reopened Tuesday, and the park itself remained unaffected by the blaze.

The fire comes amid California's third straight year of drought, creating tinder-dry conditions that have significantly increased the fire danger around the state and sent firefighters scrambling seemingly nonstop from blaze to blaze.