According to the fire department, the leak from a 20-inch pipe was reported at about 12:15 a.m. Thursday in the Atwater Village neighborhood of Glendale.
CBS Los Angeles reports that flow to the above-ground line - which runs from Bakersfield to Texas - was shut off around 1:20 a.m.
Oil spilled over approximately half a mile and is knee-high in some areas. Firefighters and hazardous materials crews are on the scene.
No injuries were reported, but CBS Los Angeles reports several people were transported to a local hospital complaining of illness from the odor.
A handful of commercial businesses are affected, including a strip club that was evacuated.
Fire department spokesman Erik Scott said there's no "visible evidence" that the oil has entered storm drains, which empty into the Los Angeles River. But he said it's possible that oil has seeped under manhole covers.
City and state crews anticipate the cleanup will take approximately 24 hours.