The incident happened at the Red CentreNATS event in Alice Springs on Sunday, with footage taken by spectators showing fuel igniting and flames being thrown over fans from a car skidding in circles.
"Twelve patients are currently being treated at Alice Springs Hospital. One patient is in a critical condition and the remaining 11 are in a serious but stable condition," organisers said in a statement.
"This is a distressing situation, however all patients are receiving the care they need."
Billed as the "Ultimate Festival of Wheels", the event attracts thousands of motoring enthusiasts to central Australia for a weekend of racing and entertainment.
Organisers shut down the event after the incident, with police and fire authorities investigating. DM