SpaceX has confirmed that its Crew Dragon capsule has experienced a "malfunction" during routine engine testing in Florida.
A US Air Force spokesman told local media that the incident at Cape Canaveral Air Force Station had been restrained and no one had been injured.
An unmanned Crew Dragon flew successfully for the first time last month.
This latest incident, however, may delay plans to launch a manned mission to the International Space Station later this year.
Since the end of the Space Shuttle program in 2011, the US has failed to send its own astronauts into orbit. Instead, he had to rely on Russia and its Soyuz spacecraft.
- Crew Dragon test flight in graphics
Images of smoke coming from the space capsule are circulating in social networks.
SpaceX, founded by Elon Musk in 2002, said it had opened an investigation and was committed to ensuring that its systems meet "stringent security standards."