A 42-year-old man drove off in a white Audi after officers were called to a mental health incident at a property in Gymea Bay, southern Sydney, at 12.25am on Saturday.
Shortly afterwards, police received reports an Audi had rolled over a concrete barrier and landed on a blue Toyota sedan at Sans Souci, about 13km away.
The man died at the scene, as did the driver and passenger of the Toyota, who are yet to be formally identified.
Police were unable to speak to the man at the home before he drove away, Detective Acting Superintendent Graham Hibbs told reporters.
The Audi was travelling at "considerable speed" before the crash, which caused one of the cars to catch alight, he said.
"It was a horrific scene. We really feel for the families of all three persons and their loved ones," he said.
"I don't think there were many cars on the road at that time."
A crime scene has been established and investigations are continuing into the crash circumstances, with drugs and alcohol a line of inquiry.
Some 20 to 40 bystanders tried to help after one of the cars caught on fire.
It has been a deadly 24 hours on Australian roads after a 25-year-old woman and an infant died in a two-car crash near a popular holiday spot in Queensland.
In a separate crash in Queensland, two girls, aged 13 and 14, suffered serious injuries after they were hit by a car while on a footpath in South Mackay.
Lifeline 13 11 14
beyondblue 1300 22 4636
17°C