The incident last Thursday was filmed and posted on YouTube by passenger Luka Banicevic, who compared the scene to a horror movie.
"A little bit of panic ensued in this packed bus behind me, as you can hear from all the voices. The walls resemble a scene out of 'The Shining.' Bus might need an Exorcism," he wrote on YouTube.
In the video, the red, viscous liquid appears to be dripping from inside the roof of the bus, down the wall and then pools on the floor of the vehicle.
Passengers can be seen moving away from the liquid as it sloshes around near their feet.
One passenger yells out that the liquid was hazardous. Another says it is flammable and smelled. A third can be heard saying the liquid is hydraulic fluid.
Commuters called on the driver to stop the bus and open the doors to the vehicle.
TransLink said Wednesday that it is investigating the incident and tracking down maintenance staff to determine what the liquid was.