A number of train carriages were caught up in the blaze, sparking concerns about their contents. No-one was killed during the incident, though one person was treated for smoke inhalation.
One resident told local media the incident looked “like a scene from hell”.
The train derailed in the Arizona city of Tempe as it crossed a bridge over Tempe Town Lake at around 6:15am.
It is understood around 100 emergency service personnel, including firefighters, police, and paramedics, attended the scene.
Between eight and 10 of the train carriages are believed to have been affected by the blaze.
Many of them were carrying lumber, but some of the carriages contained tanks full of flammable liquid.
None of these tank carriages were involved in the fire, but at least one of them has leaked, officials have said.
In addition to the fire, the south side of the bridge collapsed, causing some carriages to fall down into an empty park underneath.
The cause of the derailment is still under investigation, and Tempe police are asking anyone who witnessed the incident to contact them.
Local news size AZCentral reports the spill could have “significant consequences for fish and wildlife downstream” if the chemicals got into the lake.
Aerial footage of the incident posted to Twitter shows huge plumes of smoke rising from the bridge, with a line of fire along its length.
Tempe Fire Chief Greg Ruiz said late last night UK time: “The fire has been knocked down and the crews continue to address any hotspots along the bridge.”
Mr Ruiz added state officials had been monitoring air quality and found there was “no imminent hazard”.
He added emergency service personnel had moved their focus to containing a hazardous material leak from one of the train carriages.
According to CNN, the freight train was headed from Pheonix to Tucson – both cities in Arizona.
City residents told local media the railroad bridge affected by the fire was over 100 years old.