Amanda Bynes, 27, the former child star, wearing a blonde wig - set fire to a driveway in Thousand Oaks in southern California Monday night.
"I saw this girl laying right here with her left pant leg on fire," said witness Andrew Liverpool. "I look at her and I'm like, 'it's Amanda Bynes!' She was, like, really frantic like she wanted to get out of there and she's like, 'my dog has been burned.'"
Liverpool says Bynes tried hailing a taxi to get away.
"I was like, 'Don't take her, I don't know what's wrong with her, like do not let her in the car,'" he said.
Deputies responded to the scene and talked to Bynes, but did not charge her with a crime.
"They determined she met the criteria of 5150 of the Welfare and Institutions code," said Ventura County Sheriff Sgt. Eric Buschow.
"A 5150 is a psychiatric hold. It means patients can be taken involuntarily from where they are and to be put in a setting where they are evaluated by specialists in a hospital. So psychiatrists and a disciplinary team will evaluate her," said Dr. Damon Raskin, Cliffside Malibu.
Overnight, Bynes remained in the hospital on a mental health hold, where she can be observed for up to 72 hours. The "Hairspray" actress has been in and out of court - sparking headlines with her colorful wigs and bizarre behavior.
"I think Amanda has been in the public eye so long that there is a twisted part of her that thinks this attention may be good," said Howard Bragman.
Bynes even took to Twitter, calling Miley Cyrus "ugly," and Jenny McCarthy "an old lady." Some close to Bynes say this is all an act.
"This could be the catalyst for some significant change in her life," Bragman said.
Bynes' typically active Twitter account has been silent since Friday, when she tweeted "drake is gorgeous." Three days later came the fire incident. KABC-TV said the flames were fueled by gasoline.
"It's dark, it's 8:45 and I just see her laying down, stomach up and her pant legs on fire, a trail of, you know, fire and gas, and I pull over," Liverpool said.
Responding fire officials did not administer any medical care, Aguilar said.
Richard Hutton and David Feldman, who are listed as Bynes' attorneys in industry databases, refused to comment.
The former Nickelodeon actress has had several run-ins with the law. In December, she resolved a misdemeanor hit-and-run case after entering into a civil settlement with other drivers.
She was charged last fall with driving on a suspended license after it was temporarily taken away from her following two hit-and-run cases. She also pleaded not guilty to drunken driving in a separate case.
Earlier this month Bynes appeared in a New York court on allegations that she chucked a marijuana bong out the window of her 36th-floor Manhattan apartment.
In the late 1990s and early 2000s, Bynes was one of the hottest actors on children's TV.
Beginning in 2000, she won four consecutive Kids Choice Awards for best television actress, the first for her role in the ensemble kids comedy-variety show "All That," and the others for her starring vehicle "The Amanda Show." She also appeared in the films "Big Fat Liar" and "What A Girl Wants."
Bynes also starred in several TV movies before her career began to decline. She grew up in Thousand Oaks.
The Associated Press contributed to this report.