According to a report from the Coast Guard and the Florida Department of Environmental Protection, the small pleasure craft caught fire in Pensacola Bay south of the Bob Sikes toll bridge Sunday afternoon.
Investigators have not determined the cause of the fire.
Shane Michael, Gulf Breeze fire chief, said two people who were on board the boat were picked up by passersby and made it safely to shore.
They were not injured, according to an incident report.
Michael said the charred boat had grounded in shallow water.
Lt. Elizabeth Tatum, a spokeswoman for the Coast Guard, said an inspection showed that fuel was not leaking from the boat as originally feared. Initially, officials believed as much as 200 gallons of diesel fuel could have been released into the water.
"We have determined that the fuel is contained within the boat," she said.
Tatum said the boat's owner would be responsible for having it removed.