Around 300 people were onboard the ship when the blaze broke out.
ADVERTISEMENTA large rescue operation was launched off the coast of Sweden after a car ferry with 300 people on board caught fire.
The fire was swiftly brought under control and there are no reports of any injuries.
Maritime authorities say that three helicopters and seven ships had been dispatched to the scene. The ferry will now be towed to port, they added.
Swedish media report that the fire broke out on board the Stena Scandica ship on Monday afternoon, while it was sailing north of the island of Gotland.
The Swedish ferry company said 241 passengers and 58 crew members were onboard the vessel, which was travelling from Nynashamn in Sweden to Ventspils in Latvia.
The fire appears to have spread from a refrigerated truck on the car deck, authorities say.
Euronews has contacted the ferry company Stena Line for a further statement on the incident.
Swedish and Finnish rescue services began evacuating families and elderly passengers from the ferry late on Monday.
"We have strong winds that make evacuation by boat difficult, but the situation is calm and under control," a Swedish Maritime Administration spokesperson said.
A technical investigation will be launched to determine what started the fire.