Police spokeswoman Fatina Ubaidatova says no one was hurt when the fire swept through the mosque in Kizlyar, located near the border with Chechnya.
Fire investigators were still trying to determine the cause of the blaze, which broke out after morning prayers.
There were no indications that the fire was connected to the Islamic insurgency that spread through Russia's predominantly Muslim North Caucasus region after two separatist wars in Chechnya.
A number of moderate Muslim clerics who oppose a more fundamentalist form of Islam have been attacked or killed in Dagestan in recent years.
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