A bus driver in Brisbane has died after a passenger doused him with inflammable liquid and set him on fire in front of passengers, Australian police have said.

There was no apparent motive for the killing of the 29-year-old man named by local media as Manmeet Alisher, a well-known singer in the Indian Punjabi community.

A 48-year-old suspect was arrested at the bus stop and placed in custody.

Police superintendent Jim Keogh told reporters "it's a horrific incident here in the quiet suburb of Moorooka".

"This is a rare one where it appears to be no apparent motive."

He added: "A bus driver, going about, doing his business, supporting the community, has had his life taken from him in what is a senseless and needless act."

Bystanders kicked down the back doors of the bus to rescue passengers, who were said to have been "traumatised" by the incident, Supt Keogh said.

"It's lucky the whole bus didn't become engulfed in flames," he added.

Around six passengers were aboard the vehicle and some were treated for smoke inhalation.