It is understood the man got one hand caught in a processing machine and his second hand became trapped as he tried to free himself.
A man delivering straw to the farm was the first to raise the alarm after hearing the 40-year-old yelling out in pain.
With help from other workers at the farm, a group of men managed to free him from the machine and immediately applied tourniquets to his arms.
Darling Downs Local Ambulance Service Network spokesman Glen Maule said the actions of the workers and the delivery driver were lifesaving.
"The bystanders offered immediate first aid to the patient and applied tourniquets to his injured limbs to help stem the blood loss," Maule told news.com.au.
"They worked to free him from the machinery and that was then finalised by personnel from the Queensland Ambulance Service."
The man had already suffered extensive blood loss, with an anaesthetist and two nurses sent from Stanthorpe Hospital to help him and treat bystanders for shock.
"The team worked with a paramedic and were able to stabilise him and provide fluid replacements prior to the flight but he is still in a very serious condition from blood loss," Maule said.
Another worker was treated at the farm for shock.
The owner of Country Farm Fresh Mushrooms, Neil Newman, told The Chronicle nobody had actually seen the incident.
"We wish him a speedy recovery. Needless to say, it was an accident that shouldn't have happened," he said.
"We had a guy here delivering straw who heard him yelling out and he went to help out."
Workplace Health and Safety Queensland will investigate the incident.