MIAMI (AFP) - More than 500 people were rescued from a burning ferry off the US territory of Puerto Rico Wednesday (Aug 17), with no major injuries reported, authorities said.

The Caribbean Fantasy, a passenger and cargo ferry, was abandoned to the flames after firefighters decided that continuing to fight the blaze was too risky.

The ship, owned by America Cruise Ferries, ran aground near a small island off San Juan and authorities said it was likely to sink.

"The perimeter will be guarded, but unfortunately there is nothing more to be done with the vessel," said San Juan fire chief Angel Crespo.

Crespo said no fatalities had been reported and the 510 passengers and crew were taken off the burning ship and brought ashore.

The US Coast Guard said the fire was reported to have started in the ship's engine room and was spreading to other compartments when the evacuation got under way.

The smoking ferry was visible from the port as passengers arrived on rescue vessels.

The Coast Guard said multiple air and surface craft were dispatched to rescue passengers, including a coast guard cutter.

Fire, pilot and tug boats also responded from the port, it said.

"At this stage the priority is attending to the people," Crespo said. Passengers underwent medical checks as they arrived at port.

Crespo, who also heads Puerto Rico's disaster management agency, said the fire has been contained in the engine room but was not yet out.

The cause of the fire was not immediately known.

The Panamanian-flagged vessel was two nautical miles north of San Juan when the fire was reported to the Coast Guard, at about 7.42 am (7.42pm Singapore time).

Nestor Cidras, the ferry line's vice-president for sales and marketing, said the Caribbean Fantasy had left Santo Domingo late Tuesday and was supposed to have arrived in San Juan at 8am.