Sergeant Tony Woodbridge, of Oamaru, said police received a report of the crash at the State Highway 1 crossing at Reidston, about 15km south of Oamaru, at midday.
A southbound vehicle was stopped at the level crossing, when it was allegedly ''rear-ended'' by a silver Toyota Rav4, Sgt Woodbridge said.
The southbound hatchback was shunted across the other side of the railway tracks, while the Rav4 came to a stop on the tracks in the path of the oncoming train.
Sgt Woodbridge said the train driver saw the scene unfolding, but was was not able to stop in time, hitting the Rav4 which ended up on its roof.
A helicopter landed at the site about 12.30pm and transported the 91-year-old female driver of the Rav4 to Dunedin Hospital.
The road remained closed until about 3pm.
The Serious Crash Unit was earlier at the scene.
Police are making enquiries into the circumstances of the crash.
A St John spokesman said one woman had serious injuries and was being taken to Dunedin Hospital by helicopter.
Two other patients were being treated for moderate injuries at the scene.
An Otago Daily Times reporter at the scene said a train was stopped across the road at a SH1 crossing.
He could see the two crashed vehicles next to the train, one an SUV on its roof which was badly damaged.
