Video from the scene showed acrid black smoke billowing across the lake as emergency crews attempted to control the flames as they moved towards cars marked "hazardous materials".
The accident, just east of Phoenix, happened about 6.30 am local time on Wednesday morning. Tempe police warned people to avoid the area while Tempe Fire Medical Rescue reported that the second alarm fire was burning through multiple cars carrying lumber.
Tempe Police chief Sylvia Moir said no injuries were known at this time but that the scene is very dangerous.
"For safety measures, all of Tempe Town Lake is closed until further notice," Tempe Police said.
— Tempe Police (@TempePolice)July 29, 2020