It turned out to be vapor, NASA said.
"We don't exactly know the nature of the spill ... but the crew is doing well," said Mike Suffredini, NASA's space station program manager. "It's not a life-threatening material."
The crew first reported smoke, but it turned it to be an irritant, potassium hydroxide, which was leaking from an oxygen vent, Suffredini said.
A smoke alarm in the Russian segment of the station went off Monday morning as the crew was working with an Elektron oxygen generator aboard the complex, reports CBS News space consultant Bill Harwood. Flight engineer Jeff Williams reported a strong smell, possibly associated with a chemical release of some sort.
"We would like to have any words you might have on the concentration of smoke, whether it's increasing, decreasing," astronaut Shannon Lucid called from mission control in Houston.
"I would say the situation is stable right now," Williams replied around 7:45 a.m.EDT. "There's an obvious smell, and it's stable. There was never any smoke, there was a smell and it was perhaps wrongly assumed to be a fire initially. Turned out to be this toxic atmospheric release."
"OK, Jeff, we copy. There was not a fire, it was just this toxic liquid that was coming out."
"The reason we assumed a fire right away is ... the Elektron was very hot," Williams said.
The Elektron generates oxygen by breaking down water. The station also is equipped with so-called "candles" that can generate oxygen through a chemical reaction. The cause of Monday's problem is not yet known, or whether the Elektron is operational. A new crew, launched earlier Monday from Kazakhstan, is scheduled to dock Wednesday.
Meanwhile, a Russian Soyuz spacecraft carrying the international space station's next commander, flight engineer and a U.S. entrepreneur who hopes to pioneer commercial space exploration, blasted off from the Baikonur Cosmodrome in Kazakhstan early Monday and rocketed safely into orbit.
Climbing away from the same launch pad used by Yuri Gagarin 45 years ago, the Soyuz TMA-9 spacecraft climbed away through a clear blue sky, cheered on by Russian and NASA managers, engineers and family members who flew in from Moscow.
At the controls of the Soyuz TMA-9 spacecraft was veteran cosmonaut Mikhail Tyurin and NASA flight engineer Mike Lopez-Alegria. Along for the ride was Anousheh Ansari, an American entrepreneur and long-time space enthusiast who reportedly paid the Russians around $20 million for a visit to the space station.
"Let's go!" one of the crew members exclaimed as the Soyuz roared to life. A few minutes later, Tyurin reported, "We feel fine, insignificant vibration, the G force is rising stably, smoothly."
Nine minutes after liftoff, the spacecraft slipped into its planned preliminary orbit, deployed its two solar panels and radio antennas and set off after the international space station for a linkup early Wednesday.