Two appliances from Newport Fire Station were called to Venture Quays after the boat was towed to shore by Hamble Lifeboat and Gosport Lifeboat, both independent lifeboats from the mainland.
A fire was reported to Solent Coastguard by the vessel’s crew in the vicnity of Osborne Bay at around midday.
Newport Coastguard Team are on scene near to the Red Funnel terminal alongside paramedics from the Isle of Wight Ambulance Service.
The fire is understood to be under control.
UPDATED: A blown turbo that caused oil to spill onto an exhaust resulted in thick smoke, but no fire, Island Echo understands.
Paramedics have checked over the crew for smoke inhalation.
The incident has now been brought to a close and the vessel handed over into the control of the harbour master.