Part of Whitehall Road has been cordoned off after a deep hole opened up yesterday (Sunday) afternoon.
The hole - which looks to be around 1 metre across - is at the Lawrence Sheriff School end of the road.
It is on the outer edge of the roundabout that connects with Clifton Road, next to the pedestrian crossing.
Eyewitnesses said that police initially coned off the area around the hole until some sturdier barriers arrived.
A spokesperson for Warwickshire County Council said: “What occurred in Rugby was a collapsed road due to a water service or sewer pipe collapse or leak.
“Our Highway team has made the site safe and we will continue to monitor the site during investigations.
“Additionally we have asked Seven Trent Water to check their services running through this area and they will undertake any necessary repairs.”