Passengers on board the flight from the Gold Coast to Kuala Lumpur said they saw sparks coming from an engine and heard explosion-like sounds before the plane was forced to land in Brisbane late Monday.
Successive sparks boom boom boom went off and some people were crying and calling out 'oh my god oh my god,' passenger Eric Lim wrote on Facebook.
That was quite an experience seeing the engine on fire, another passenger calling himself Hippie Tim wrote on Twitter.
AirAsia said the engine problems appeared to have been caused by a bird strike.
No injuries were reported on the flight which had 345 passengers and 14 crew onboard.
Last week, an AirAsia plane was forced to make an emergency landing in Perth after an engine malfunctioned 90 minutes into the flight to Kuala Lumpur.
The Airbus 330, with 359 people on board, shook heavily with one engine making a loud noise, like sitting on top of a washing machine, according to one passenger, but landed safely without any incident.