Chief Fire Officer at the scene Jamie Ramsay, said the crash near Harington Point was reported to emergency services at 12.10pm and crews from Lookout point and Portobello attended the scene.
Two people were believed to be inside the vehicle at the time of incident, and had to swim from the accident to shore, CFO Ramsay said.
Qualified firefighter Liam McCall, who attended the scene was attempting to remove about ten paint cans which had spilt inside the vehicle.
"A driver has ended up in the harbor, and you can see a bit of house-paint has started to spill from the vehicle, so we have Mr McCall in painter overalls trying to reduce the pollution," CFO Ramsay said.
A St John spokeswoman said one ambulance attended the scene and transported one patient with moderate injuries to Dunedin Hospital.
Local resident and community board member Hoani Langsbury was at the scene and said he had been alerted by an ongoing car horn.
"I thought there was a kid in a car because I heard the horn going off," he said.
Mr Langsbury said he had brought blankets for the victims from his home when he discovered they were "soaking and covered in paint".
A police spokesman said a tow-truck was on the way to remove the car from the water.
