There was a "thundering" bang as two cars crashed on Te Ngae Rd leaving one flipped upside down on the roadside.
Police, ambulance and fire were called to the scene, at the intersection of Brent Rd and Te Ngae Rd shortly before 10.15am.
A Rotorua Daily Post reporter at the scene said a woman who was "visibly shaken" was taken into an ambulance.
"There are at least three police cars, two fire trucks and an ambulance here."
Although the car wasn't blocking the road she said there was "a little bit of congestion coming from both directions".
Rotorua police Senior Constable Regan Framp said the single occupant of the "little red car" was leaving Brent Rd, turning right on to Te Ngae Rd.
The silver car was travelling north on Te Ngae Rd, towards the airport, he said.
"At the same time the driver of the silver car thought [the driver of the red car] would turn into the median strip and then merge, but she didn't.
"The vehicles have collided and the silver car has rolled."
Framp said the driver of the silver car was an elderly woman and was checked out by the ambulance staff.
"She appears to be shaken, rather than seriously injured."
Neighbour Kelly Kautai was doing the dishes when she heard the "thundering" bang.
"I turned around and saw that silver car flipping through the air so grabbed my phone and dialled 111.
"She must have rolled a couple of times. Just to see that flip and for her to walk away with just scratches was a miracle."
Kautai said she knew straight away it was a crash because it "was a real thundering bang".
"It looks like it was out of a movie, when you see a car flipped like that.
"Nose to tails are a common occurrence but not anything that dramatic. I'm just glad everyone is okay."