Toronto police say the collision happened near the corner of Eglinton Avenue East and Oswego Road, east of Danforth Road, as a westbound vehicle was passing a stationary TTC bus.
The bus was stopped in the curb lane to pick up passengers, when an Infiniti G37 approaching from behind started to move around it.
But police say the driver changed lanes, then lost control and entered the opposing lanes of traffic, which led to the collision with an eastbound Honda Civic.
Police were called to the scene at 10:18 a.m.
The Infiniti was carrying a driver and three passengers. One passenger, a 33-year-old woman, was ejected from the vehicle and landed on the roadway. She was taken to hospital with life-threatening injuries.
The Honda had one driver and one passenger on board.
Police say that four people were taken to hospital, in addition to the woman who was ejected from the vehicle. The others suffered minor to moderate injuries.
Some TTC buses were diverting as a result of the crash on Sunday morning and afternoon.
The collision remains under investigation.
Police are asking anyone with information to contact investigators at 416-808-1900. Tips can be passed on to Crime Stoppers at 416-222-8477.