A spokesperson for the company says workers using a horizontal drilling rig to tunnel under the pavement hit a four-inch line near South Wilmington Street and Martin Luther King, Jr. Blvd.
PSNC closed off the leak just after 11 a.m.
The leak was reported around 9:40 a.m., prompting fire officials to evacuate people from buildings in the area, including Memorial Auditorium, Shaw University, the Raleigh Business and Technology Center and the Progress Energy Center.
About 60 people from Progress Energy were taken to the convention center while Shaw employees were sent home for the day. Students were evacuated to a residence hall further from the scene.
"I was in my house looking at the TV when I heard a knock at the door. I looked, and it was a fireman. He told me I had to evacuate, to turn everything off, and I needed to get out of here immediately," said evacuated resident Tracy Washington.
Musicians in the Progress Energy Center for the Performing Arts were also told to get out.
"We were talking and playing and everything and all the sudden they said you got to leave the building, there's a gas leak and the building might blow up," said Clarinet player Jimmy Gilmore. "So, in my 41 years with the orchestra, I have never been in a building that has blown up, so I didn't want to chance it."
"It was kind of an acrid smell, a strong gas smell," said Cello player Liz Beilman.
There were no reports of injuries.
Officials were checking to see why the accident happened and if the construction crew called to get utility lines marked before they started digging.
"That will be part of our investigation. We'll begin to see if a locate ticket was issued to the contractor performing the work on the street," said PSNC spokesperson Angie Townsend.
Townsend said contractors - and anyone digging - can call 811 to get utilities marked.
"No one wants to hit a gas line on purpose. Certainly, we want to ensure the safety and security of our system. We meet with folks regularly to talk about the 811 system," she said.
"The underground locator provides a great service. However, whenever you're dealing with underground service, nothing is 100 percent accurate," offered Raleigh Battalion Chief Frank Warren.
The contractor was laying fiber optic lines in downtown Raleigh. Morrisville-based Precision Networks, Inc. says it did call 811 to get the location of gas lines.
It's investigating its own crew to find out what went wrong.
"We called in for multiple locate tickets. We're dedicated to worker safety and the public's safety. It's our standard to conduct our own internal investigation," said Guy Smith, Director of Operations of Precision Networks, Inc.