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Six people, including two children, were treated by paramedics following the crash on Camms Road in Cranbourne about 8.40pm.
A Ford Falcon collided with a Toyota Corolla, injuring four people in the Corolla and two in the Ford, police said.
One woman’s arm was severed in the horror collision after she became trapped.
Victoria Ambulance said a woman in her 30s suffered upper body injuries and a woman in her 50s was treated for lower body injuries.
Both were taken to the Alfred Hospital in a critical condition.
The children, a primary school-aged boy and girl, were also treated for injuries.
The girl was taken to Royal Children’s Hospital in a critical condition while the boy remains in the same hospital in a stable condition.
A neighbour rushed to the scene after witnessing the smash to help free two of the trapped victims.
“I struggled with both seats and belts before I decided to come back for the scissors and cut them both out,” the witness told 9News.
A woman and a man from the second car, aged in their 20s, remained on the scene to assist police with the investigation.
They were also treated for minor injuries and taken to Dandenong Hospital.
An investigation into the circumstances of the crash remains ongoing.