The blaze was detected on a balcony of the Pacific Adventure about 3.30am, with photos showing travellers watching on in shock.
A P&O Cruises Australia spokesperson said the fire was extinguished. However, the extent of the damage and cause is yet to be determined.
“This fire activated our emergency response procedures including a full muster of guests and crew and we thank everyone on board for their cooperation,” the spokesperson said.
“There are no reports of injury.”
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9News understands the ship was carrying 3017 guests and 1080 crew.
The vessel is in the midst of a three-day cruise in and out of Sydney.
The ship is scheduled to return on Tuesday.