No passengers were injured but their luggage was incinerated.
Kiwi Laura Smith posted about the close call on Facebook saying, "Pretty shaken after a close call today. We may have lost all our belongings but by some miracle everyone made it out ok. Don't take life for granted".
Smith described the blaze to the Herald.
"The back of the bus started to go up in smoke and the bus driver turned the engine off in the middle of the road halfway up a hill," she said.
"One of the other buses in the tour group burst into flames climbing a steep hill in high temps this arvo.
"People managed to escape with whatever they had in their hands before it burst into flames, so everyone lost all their passports, luggage, laptops etc as well as supplies from tonight," she told the Herald.
"Everyone was fine but a bit in shock. It was pretty dramatic - the flames were huge with random small explosions."
An Australian man she spoke to told her when the bus stopped they thought it had just broken down but then the smoke got bigger so they all rushed off.
It took about a minute to be completely engulfed in flames.
Definitive Events, the Australian company organising the Dawn Service, has taken the group to a hotel in Canakkale about 45 minutes from the site, where warm clothes and blankets are being provided.