The animal, thought to be a Staffordshire terrier or Staffordshire cross, was found dead in a wooded area in the north of Kirkcaldy, Fife, last Friday.
The People for the Ethical Treatment of Animals (Peta) charity has put up the four-figure reward for information leading to the arrest and conviction of the person or people responsible for carrying out the "sadistic and violent" act.
Animal abusers are a threat to the whole community and their behaviour is likely to escalate if it is not stopped, the group warned.
Police and animal welfare workers described the premeditated attack as a barbaric and sickening act of cruelty which would have caused the animal great pain before it died.
The dog was tied to the tree, doused in flammable liquid and set alight.
Peta spokesman Ben Williamson said: "It is imperative that any community faced with sadistic and violent acts such as this takes measures to find the culprit or culprits and bring them to justice.
"Animal abusers are a danger to everyone."
Police can be contacted on 101 and the Scottish SPCA can be reached by dialling 03000 999 999.