According to a police statement, it was not clear why the vehicle taking part in the two-day Esztergom Nyerges Rally in northwestern Hungary veered off the road.
The crash occurred near the town of Bajot in the northwestern Komarom Esztergom county close to the Slovakian border and left at least seven injured, police said.
Eight ambulances and four rescue helicopters were dispatched to the scene and the rally was immediately halted.
Two spectators were seriously injured, including one child who was taken to hospital with life-threatening injuries, according to the paramedics at the site, quoted by the MTI news agency.
Six other people, including one child, sustained minor injuries and received on-site treatment, the paramedics said.
The Hungarian National Motorsport Association (MNASZ) expressed its condolences to the relatives and family members of the victims.
It vowed to cooperate with the authorities to investigate the circumstances of the accident without delay.
