The seven-year-old was hurt in the incident in Bedford Avenue, Aberdeen, at around 2pm today.
Police said they received "reports of a boy on fire" and they are following a positive line of inquiry.
Petrol was said to have been involved in the incident and the boy was taken to Royal Aberdeen Children's Hospital where his injuries have been described as serious.
Bedford Avenue has been closed to traffic while officers investigate.
A force spokesman said: "A seven-year-old boy is undergoing treatment following an incident in Bedford Avenue in Aberdeen. It was reported to us at 2pm this afternoon.
"The incident involves petrol and the boy has quite serious burns. Police are at the scene and following a positive line of inquiry."
Officers are appealing for any witnesses or anyone with information to contact them on 101.