The video from 2 May shows the suspect casually approach the woman and sit directly behind her before appearing to reach in and set fire to her hair a number of times with a lighter.
According to a release by San Francisco Police Department (SFPD), the teenager and two other people of interest fled the scene heading eastbound into the city.
Other passengers on the bus later assisted the woman, who was estimated to have been between 50 and 60 years old.
Authorities released the CCTV in an appeal for the victim to come forward and give a statement. When the incident took place she left the scene before police arrived.
Officers instead spoke to a bus operator who told them that a passenger’s hair had been set on fire by an unidentified suspect.
Underneath the footage, social media users questioned why the assailant's face was blurred in the footage, but SFPD spokesperson Adam Lobsinger said investigators are currently focusing on the victim.
"We are still looking for the suspects," Mr Lobsinger told SFGATE. “Without the victim, when we catch the suspects, it’s harder to do anything.”
The department released another photo of the victim in an appeal to locate her. Police said she had dark hair and glasses.
The alleged suspect was described as wearing a red long-sleeve top with a coloured logo on the front, matching red trousers and a black backpack.
SFPD noted that the incident has been assigned to the SFPD Special Investigations Detail (SID). They asked anyone with information about the incident to contact the department on 1-415-575-4444.