Villagers in Manthorpe were woken by the sound of an explosion in the early hours of last night.
A Mercedes van was set on fire at just after 1am in Low Road, Manthorpe - a narrow street with houses on both sides.
Ken Wingad of Low Road was one of the first at the scene and called the emergency services.
He said: “It was about 1.10am I was awoken by bangs that I thought were car doors slamming. I leapt out of bed but it was all quiet - everything looked alright.
“All of a sudden there was a great whoosh. I looked out to the left and a huge fire shot up.
“I went outside and a great, big Mercedes had been torched. I rang 999 to get the fire brigade out and they were here very quickly with the police just behind.”
Fire and rescue were able to extinguish the fire which also damaged a nearby wall and hedgerow.
The incident shook the neighbours. Those in the house opposite were particularly concerned as a baby was sleeping in the front bedroom only yards from the burning vehicle.
Lincolnshire Police are treating the incident as suspicious. Neighbours at the scene believe the van was dumped and set on fire, possibly after being involved in criminal activity.
Mr Wingad said: “There was no chance of going to sleep for the next hour or so after that. It was quite a shock at that time of night. It went off with quite a bang.
“It’s a quiet village where nothing usually happens, then suddenly this.”
Anyone with information about this incident is asked to call Lincolnshire Police on 101.