Judging by what I've read of Valyria up to the end of book four, I'd say it was a Krakatoa-size volcanic eruption. They've mentioned that the Valyrians mined volcanoes for metal using slave labor, so it stands to reason that they could get wiped out in a huge eruption. Since the Valyrians are basically Romans/Greeks with magic added, I figure GRRM stole the idea from Vesuvius (similar name) or Mount Etna. GRRM definitely based the Valyrians on the Latins, since educated people speak High Valyrian like people speak High Latin, and the Free Cities speak a mofied form of it, like Italian, Spanish (Braavos), French, etc. Illyrio is even named after Illyria, an area of the Balkans conquered by the Romans in 160BC. The only other things I can think of are an asteroid/comet strike, or, since its fantasy, some majorly fucked-up spellwork.
Someone posted a link that was supposed to be the old history of Westeros, etc. If I remember correctly it was a vocanic eruption that doomed them.
Volcano As much as I want Dany to get to Westeros next book, I want to see her take her army down the Demon road through Valyria. Or see Victarion sail through the ruins. I more thought of Valyria as Atlantis.
Isn't there a lot of connection between the Valyrians and dragons? Wouldn't the while civilization perishing by fire be odd? Or is it supposed to be irony...