
Fire and smoke were seen billowing from the stern of the ferry.
Rescue officials say a passenger made a call to 999 at 2.48pm.
Scores of fishing boats nearby soon came to their rescue.
The Malaysian Maritime Enforcement Agency (MMEA) deployed three boats and two jet skis for the rescue, assisted by the navy, police and Marine Department boats.
A Kedah Fire and Rescue Department official said a total of 52 passengers and six crew members were on board the ferry, including toddlers.
MMEA said in a statement all victims were brought to the Kuah Jetty on Langkawi Island, and no one was injured.
Kedah and Perlis MMEA deputy operations director Zulinda Ramly said they have yet to ascertain the cause of the fire.
She added the ferry is operated by Dragon Star Shipping Sdn Bhd.