Guernsey Vessel Traffic Services spotted the boat was on fire as it neared the QEII marina.
The 10 metre vessel was able to drop anchor and the two people on board were safely helped off by a passing vessel.
Guernsey Coastguard requested help from the St Peter Port Inshore Lifeboat, but the crew were stood down when it was confirmed that all people on board the burning boat were safe.
Pictured: Trident V and the inshore lifeboat.
The Coastguard said several other vessels also helped with the response, including Herm Trident V and the harbour workboat Sarnia which used her water cannon to put out the fire.
Once a line was secured the vessel was towed safely into St Peter Port Harbour for inspection by the Fire and Rescue Service and the Duty Harbour Master.
Pictured: The All-Weather lifeboat Margaret Joan and Fred Nye.
At the same time as this incident was being managed, the RNLI crew had been dispatched with the All-Weather Lifeboat needed in Sark for a medical transfer.
Pictured top: The Santa workboat.