NBC News reports the striking display was caused by a transformer explosion at the Con Edison power plant in Astoria East and North Queens - about half an hour away from the city centre.
Vision of the light show flooded social media, with residents taking to Twitter to broadcast what they were seeing out their windows.
The explosion caused power outages and also impacted subway service in the area.
A power outage at LaGuardia Airport, which is located in Queens, prompted flight cancellations, the NY affiliate of NBC reported earlier on Thursday.
CBS Newspath senior producer Heather Scott reported from Astoria that the sky turned "super bright blue" and it "looked like daylight outside".
An Con Ed transformer explosion in Astoria caused a blue sky over Queens.
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Con Edison says a couple of transformers tripped offline at the substation at 20th Avenue and 32nd Street, sparking a fire. Con Ed confirmed that the airport was running on generator power.
Mayor Bill de Blasio said the Metropolitan Transportation Authority was largely unaffected, but there were extensive delays along the 7 line.
"There are no injuries reported, and no fire", the statement said.
"Is it fireworks?" Louis Santoro, a New York City resident, wrote on Twitter. Scattered power outages, including LGA.