Spanish authorities at the Montgó Mountain range near the holiday town of Denia in eastern Spain had to evacuate dozens of residents in the early hours of Tuesday morning.
It took fire fighters an hour to put out the flames, by which stage 1,000 square metres of woodland had been destroyed.
Spanish National Police were alerted by a neighbour who saw a Chinese lantern, made out of paper and with a candle lit inside, falling from the skies into a forested area, Spanish daily El Mundo reported on Wednesday.
Officers at the scene soon found several people having dinner in a house close by who admitted to sending a number of sky lanterns up into the air.
“If the wind had been stronger we could have been facing a disaster,” a spokesman for Alicante’s National Police told The Irish Times.
None of the eight detainees, five men and three women, have been named.
The group were granted bail by a Valencia judge on Wednesday until court proceedings are resumed.