A bus driver has died after an attacker doused him in flammable liquid and set him alight as he sat at the wheel at a bus stop.

Manmeet Alisher, 29, was "covered in flames" after an assailant set him on fire as he picked up passengers in Moorooka, Brisbane.

Alisher suffered horrific injuries and died at the scene. He was described as a passionate singer and a much-loved member of the local Punjabi community.

At least six people were taken to hospital and several, including children, were treated at the scene.

A 48-year-old man was arrested at the scene, and a murder investigation is underway.

Local taxi driver Aguek Nyok was hailed as a hero after he kicked open the back door of the burning bus and saving passengers trapped inside.

"When I looked at the back door, people were lining up trying to get out, but they [couldn't]," he told Australia's 7 News.

"So I went and I kicked the back door and the third time it worked for me. Unfortunately I couldn't go inside because of the fumes."

Local businesses were evacuated from the area and bomb squads were called in to asses the scene.

Superintendent Jim Keogh told reporters: "Words escape me, it's a horrific incident. The fire was substantial, he would have stood little chance.

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