Date: 202106
Local time of day: 1801-2400
Location: ZZZ.Airport, US
Light: Night
Aircraft: B737-700
Operator: Air Carrier
Operating under: Part 121
Flight plan: IFR
Mission: Passenger
Flight phase: Takeoff / Launch
Airspace: Class B ZZZ
ATC / advisory: Tower ZZZ
Aircraft component: Turbine Engine
Component problem: Malfunctioning
Reporter organization: Air Carrier
Reporter function: Captain; Pilot Not Flying
Reporter qualification: Flight Crew Multiengine; Flight Crew Instrument; Flight Crew Air Transport Pilot (ATP)
Human factors: Workload; Distraction
Second reporter function: Pilot Flying; First Officer
Anomaly: Aircraft Equipment Problem Critical; Flight Deck / Cabin / Aircraft Event Smoke / Fire / Fumes / Odor
Detector: Person Passenger
When detected: In-flight
Result: Flight Crew Landed in Emergency Condition; Flight Crew Returned To Departure Airport
Contributing factors: Aircraft
Primary problem: Aircraft

Narrative: During the takeoff roll; the FA's (Flight Attendant's) dinged us twice. We continued the takeoff. Upon rotation they dinged us four times; twice before clean-up altitude. After reaching clean-up altitude I called the cabin and the FA's reported passengers seeing flames and sparks coming from the right engine; as well as hearing popping noises. The FA's reported the entire cabin lit up brightly; but that there was no smoke in the cabin. We informed ATC that we had a #2 engine fire; were returning for landing; and requested fire truck assistance. We had no cockpit indications of a fire or malfunction. Both engines were producing symmetric power and operating normally; according to our gauges. Upon landing and shutting down the engines on Taxiway XX; Fire Rescue took temperature readings and reported them in the normal range. We were towed to the gate.


Second narrative: Incident for [the] flight [from] ZZZ to ZZZ1. I was the pilot flying. During the takeoff roll with takeoff power set; the flight attendants called the flight deck with two dings. We elected to continue to takeoff. Right at rotation speed; the flight attendants called the flight deck again; but this time with four dings. We continued the takeoff and climbing through 1000 ft.; the Captain transferred the radios over to me and she started coordinating with a Flight Attendant.Flight attendants were reporting that the passengers on the right side were saying that the engine was on fire and they heard a popping noise and at the same time the flight attendants said they noticed that the cabin lit up momentarily. However; there was no smoke in the cabin; all engine indications were normal; and none of the Fire Handle Warning lights were lit. The Captain [requested priority handling] and told Tower that our #2 engine was on fire and that we needed to return for an immediate landing and requested the fire trucks. Tower cleared us for Runway XXR; I continued to climb to 3000 ft. at 210 kt. and started my turn for a left downwind for Runway XXR. On downwind; Tower cleared us for the visual and cleared to land XXR. A flaps 30 landing was conducted and we taxied off the runway on Taxiway XX where we shut the engines down. The Fire Crew inspected the engine and stated that everything seemed normal and that their heat sensors also indicated normal readings. After a short time; we were towed back to the gate.


Synopsis: B737-700 flight crew reported an engine fire that was noticed by the passengers during takeoff and performed an air turnback.