Network Rail said the train was heading from Ardwick to Carnforth. The line is now closed between between Manchester Piccadilly, Preston and Newton.
The train is a diesel. The smell from the fire is overpowering. Several surrounding streets have now been closed.
More top news
Police were called after the plane was stuck at Manchester Airport for hours because of a light covering of snow, according to passengers.
Beware icy stretches on Saturday night. Evening showers fade and temperatures fall well below freezing
Turning cold and clear tonight with wintry showers easing. Beware icy stretches and fog patches