The fire was discovered shortly before 2.30pm yesterday afternoon at the coal-fired power station near Selby, in North Yorkshire.
A spokesman for North Yorkshire Fire and Rescue Service said that around a quarter of a ton of "highly volatile" fuel had leaked from a vat onto a hot steam pipe in one of the power station's main boilers.
The flammable liquid then ignited, setting fire to a number of large wooden scaffolding boards nearby.
Two fire engines from Selby and one from Snaith, near Goole, in neighbouring Humberside, were dispatched to the scene and battled the fire for almost two hours, before bringing it under control.
They were required to liaise with specially trained hazardous materials officers from their respective brigades, who were also sent to the incident.
Breathing apparatus was required because of the smoke and fumes from the burning fuel.
The incident officially ended at around 4.30pm.
The last large-scale fire to break out at Drax was in May 2007, when a mill filled with oil seed rape ready to be used for biofuel set alight.
Yesterday's blaze broke out in the power station's Unit One boiler, part of the first section of the power station built in the early 1970s.
A second section was completed in 1986, doubling its capacity and making it the largest coal-fired power station in Europe.
Today it remains Britain's newest coal-fired power station, its 4,000MW output providing around seven per cent of the UK's electricity.
Drax is owned by Drax PLC, a private holding company listed on the stock exchange.