The fire broke out in the hollow of the tree at Bantock Park at around 7.30am on Wednesday morning.
Fire crews were called to tackle the blaze before tree surgeons were sent to chop it down for safety reasons.
One lane on Bradmore Road was closed while firefighters dealt with the tree but has since been reopened.
The cause of the blaze has not yet been confirmed but Wolverhampton Council said it is investigating.
A spokesperson for Wolverhampton Council said: “This morning [Wednesday] there was a fire involving a tree in Bantock Park – the hollow of the tree was set alight.
"The tree is being dealt with by the fire brigade and the city council’s tree surgeons’ team. The tree is behind a fenced area in a section of the park.
"Bradmore Road is no longer closed. We are investigating how the fire came about.”
A West Midlands Fire Service spokesman said: "West Midlands Fire Service were called to Bantock Park at 7.27am on Wednesday following reports of a fire. A crew from Wolverhampton station arrived in under five minutes and extinguished a fire at the base of a tree in the park.
"We remained on site to ensure no hot spots remained and to make the area safe, cordoning it off and working with the park gardening team to close a lane of Bradmore Road so the affected tree could be cut down by tree surgeons from Wolverhampton Council."
Posting about the incident on Twitter, Wolverhampton Fire Station said: "Wolverhampton Fire Station dealing with a tree on fire at Bantock Park.
"There is only one lane currently open on the Bradmore Road for safety of our crews and the public. This tree is likely to be cut down this morning for safety reasons."