Police had tried to pull a driver over in Venus St, in the suburb of Georgetown, about 1.40am today.
However, the driver failed to stop and fled from police. Officers did not initiate a pursuit, due to the manner of driving, Southern District Superintendent Jason Guthrie said in a statement.
"A short time later, the vehicle travelled through the intersection of Janet and Ness Streets and collided with another vehicle."
The crash also caused damage to a house.
Police initially reported that two people were critically hurt, another person was seriously injured and one person had minor injuries.
A spokeswoman for Hato Hone St John later confirmed its crews assessed and treated two patients in a serious condition and one patient in a moderate condition.
All were taken to Southland Hospital.
Three ambulances and a rapid response vehicle attended.
A Fire and Emergency NZ spokesman said fire appliances were sent from the Invercargill and Kingswell stations. One person had to be freed from a car, he said.
The police Serious Crash Unit has examined the scene and the road remained closed.
Motorists were asked to avoid the area unless they were a resident.
The crash has been referred to the Independent Police Conduct Authority for investigation.
Police want to hear from anyone who saw the incident, or who might have dashcam or CCTV footage from the crash area the time of the crash.
People can make a report online or call 105. Please use reference number P060341410.
- APL