Kate Roskruge noticed flames coming out of a NZ bus in front of her after dropping her husband Steve off on the corner of Pitt St and Karangahape Rd about 8.20am.
Thinking it was on fire, Roskruge yelled out to her husband who was still nearby on the footpath.
"The bus driver was not aware of it, so Steve told him the bus was on fire then grabbed the fire extinguisher from the bus behind them and quickly put the flames out.
"Steve is an engineer, so he knows how to do those sorts of things."
Passengers evacuated the bus as plumes of smoke came pouring out the back of the bus.
"It was rush hour traffic, and the buses were completely full," Roskruge said.
She said it did not appear anybody was injured.
The bus was travelling the 020 route between Grey Lynn and the city.
A spokeswoman for NZ Bus said the bus did not catch fire.
"The engine failed which caused emissions which looked like smoke. There was no fire.
"Our bus is fitted with a fire suppression system, so there was no requirement to use a fire extinguisher."
