The crash closed SH6 for almost three hours, just as traffic for the opening of Queenstown's winter festival peaked.
Emergency services were called to the intersection of Glenda Dr and the Frankton-Ladies Mile Highway shortly after 5pm.
The Indian man was driving a sedan with three female passengers, all India nationals, when it was involved in a head-on collision with a tradesman's van being driven by a Queenstown man.
Police said it appeared one of the vehicles crossed the double-yellow centre line near the start of a 100kmh zone.
All five people involved were taken by ambulance to Lakes District Hospital.
The Indian driver and one of his female passengers were then transported by the Otago Regional Rescue Helicopter to Dunedin Hospital, where they remained in a serious but stable condition last night.
The Queenstown driver was kept at Lakes District Hospital overnight with moderate injuries.
The other two female Indian passengers had minor injuries, police said.
