A new cultivar of Hosta named `Forest Fire`, a sport of Hosta `Sagae`, that is characterized by its variegated foliage having cordate-shaped leaves with glaucous green centers and margins that emerge yellow-green and turn creamy white as the leaf matures. A combination of new leaves and mature leaves results in a two-toned effect. The margins of `Forest Fire` comprise about one fourth of the leaf area. `Forest Fire` is a medium-large sized Hosta with an upright, mounded habit, and pale lavender flowers that are held above the foliage in mid summer.