Bellingham Fire Department spokesman Cary Gustafson says crews were called in at 10:55 a.m. and found the 58-foot Challenger engulfed in flames and pouring out thick smoke.
Both fire fighters on land and the BFD fire boat fought the fire.
No one was injured and no other vessels were damaged.
The boat was still afloat after the fire was put out.
The cause is under investigation.