Drivers and pedestrians looked on as the flames and smoke billowed from the bus.
The Harrogate Bus Company has confirmed that the fire has now been put out by fire crews, and that no one is hurt.
A spokesperson said: "We don't know what's caused the fire at the moment, but there will be an investigation."
Eyewitness Carol Walsh said she saw two fire engines were on the scene in minutes, and quickly had the fire under control.
She said: "It was full of smoke and empty when I saw it. Everyone was respectful and stayed safely behind the tape as the fire service did their job."
A tweet from the North Yorkshire Fire and Rescue Service said: "Crews wearing breathing apparatus are using a hose reel to extinguish the fire. Everyone was off the bus on the arrival of the crews. We'd advise avoiding the area due to traffic."
Video: Carol Walsh