The outage began at 8:44 a.m. and affected businesses and homes in an area near Market and 10th streets.
All of the affected customers had their power back by 9:50 a.m.
The balloon that caused the outage came into contact with power lines at 16th and Florida streets, PG&E spokesman Joe Molica said.
The Little Griddle restaurant at the corner of Market and Fell streets lost power but continued to serve their customers coffee and breakfast using gas but no electricity.
PG&E had warned residents earlier this week to be careful with metallic balloons purchased for Valentine's Day, as hundreds of outages each year in Northern California are caused by balloons drifting into power lines.