Around 500 people have been told to leave the airport and Transport for London are warning travellers to expect "long delays".
The fire service said "there are reports of a number of passengers feeling unwell".
London Ambulance's Assistant Director of Operations Paul Gibson, said: "We were called at 4.11pm to reports of an incident at London City Airport.
"We sent a number of resources to the scene including two single responders in cars, four ambulance crews, an incident response officer and our Hazardous Area Response Team (medics specially trained to treat people in hazardous situations).
"We are treating 26 patients at the scene for difficulty breathing, two patients have been taken to hospital.
"More details will follow when we have them."
The boxer David Haye, who was on his way to Edinburgh to watch a fight on Friday, tweeted he was unable to travel "As #CityAirport got evacuated when everyone started coughing uncontrollably!"
The airport said passengers were told to leave the terminal because a fire alarm was sounding.