Two houses in the Raithín estate on the Ashe Rd in Mullingar were affected by the blaze, which started at 4am after a number of petrol bombs were thrown at one of the houses.
The flames then spread to the neighbouring house.
A criminal investigation is under way and the incident is being linked to an ongoing feud between two extended families.
Responding to a call at 4.10am, gardaí arrived to find the occupants of the targeted house uninjured and out of their property, but the fire had spread to the neighbouring house in the terraced development, where a family was sleeping.
As flames and smoke rose out of roof vents on the neighbouring property, gardaí attempted to wake the seven occupants, a Romanian family.
However, when there was no response, gardaí forced down the door and went inside, pulling the family, which included a number of small children, from their beds in the smoke-filled house.
Units attached to Mullingar Fire Service arrived and brought the fire under control. While there was extensive smoke and fire damage to the houses, no one was injured in the attack.
Gardaí in Mullingar are treating the fire as a serious criminal incident, and an investigation is under way.
A Garda spokesman said there had been a number of incidents earlier that night, which necessitated the intervention of the armed response unit and a number of Garda units attached to Mullingar to keep the peace.
It is understood that the feud is a new one, between two families who have settled in the Mullingar area, but it has various strands going back a number of years. However, it was restarted recently, with money said to be a primary source of anger. On August 15 this ‘new feud’ saw a pitched battle between more than 20 men in Grange Meadows, close to the scene of yesterday’s fire in Raithín.