The catamaran was carrying 48 day-tripping tourists and four crew members when it crashed against another boat just off the island of Toxa.
Many passengers threw themselves into the sea as the Spanish Civil Guard and civilians boats rushed to the scene to rescue victims, according to local media.
A number of passengers have been treated for burns and other injuries, and many are under shock following the traumatic event.
Authorities in the Galicia region wrote on their Twitter account that two people reported serious burns and were airlifted to a hospital Tuesday.
Three others are being treated at different local hospitals, depending on the types of their injuries.
So far there are no reports of fatalities.
The nationalities of those involved in the incident are still unknown.
Dramatic pictures show a black thick plume of smoke in the air as flames engulf the boat.
Emergency services, including firefighters, are trying to put down the fire.
The boat was traveling between the Galician coast and the small island of Toxa, north of Vigo, on a sightseeing trip.
The blaze sent a thick plume of black smoke over the sea.
Toxa is a small island belonging to the province of Pontevedra, in Galicia.
The island, which expands on 110 hectares, counted just 47 residents in 2011.