A gold Volkswagen Passat was allegedly seen driving erratically moments before it collided with a blue Alfa Romeo along the busy Lygon Street precinct at Carlton about midday on Saturday.
The Alfa Romeo spun out of control and struck two pedestrians, police said on Sunday.
A 16-year-old girl from North Brunswick was in the back seat of the Alfa Romeo.
She sustained a head injury and was taken to the Royal Melbourne Hospital in a critical condition.
Her 53-year-old mother sustained non-life-threatening injuries and was taken to the Alfred Hospital with shoulder and back pain in a stable condition.
The girl's father, 61, experienced chest pain and was taken to the Royal Melbourne Hospital, also in a stable condition.
A 42-year-old male pedestrian was taken to hospital with serious injuries, while another pedestrian - a 40-year-old man - was taken to hospital with minor injuries, police said on Sunday.
Major collision investigation unit and Yarra crime investigation unit detectives have charged the alleged driver of the Volkswagen, a 40-year-old Essendon man, over the incident.
He was due to front Melbourne Magistrates Court on Sunday on charges of negligently causing serious injury, dangerous driving causing serious injury and possessing methylamphetamine.
Several blocks around the popular Carlton precinct were blocked off on Saturday afternoon and into the evening as authorities collected evidence and cleared debris from the incident.
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