The cause of the fire was never determined. A note threatening arson had been discovered on the Niagara's previous trip, but it was thought to be a hoax. Captain Miller later argued that the fire could not have originated in the engine room because that was fireproof. He maintained that it must have started from combustible cargo that had been stashed under the shafts. Such material may also have been the source of the gunshot-like sounds that one passenger reported.

Survivors of the Niagara disaster estimated that only 20 minutes elapsed between the outbreak of the fire and the total abandonment of the ship. Since the passengers and crew had little time to collect their belongings, the Niagara took an abundance of cultural artifacts down with it when it sank. In about 50 feet of water, the remains of the Niagara settled to the bottom of Lake Michigan about one mile off shore. Memories of the disaster persisted and were occasionally revisited in newspapers and by maritime buffs, but deeper knowledge of the Niagara and Great Lakes palace steamers faded.

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