The incident occurred shortly before 10 a.m. as the Chinese American Heritage Foundation's train float passed through the intersection of Orange Grove Boulevard and West Green Street.
The blaze was quickly extinguished and the float was towed by a heavy-duty truck. No injuries were immediately reported.
The disabled float briefly brought the parade to a halt at the scene. Marching bands and other participants then began streaming past the vehicle as the popular event continued.
A tweet from the parade's official Twitter account thanked spectators for their patience and cooperation with law enforcement.
The cause of the fire was unknown.