About a dozen other injured people, believed to have been passengers on the train, were taken to hospitals nearby, with one of them in a critical condition after being trapped in the rubble.
The driver of the train was in a serious but stable condition after being freed from the wreckage and taken to The Alfred Hospital with lower body injuries.
He was trapped in the train for more than an hour before being freed at around 1pm.
Paramedics gave the driver fluids and oxygen as emergency services worked to free him.
"Our team were treating his injuries while he was in there," an ambulance spokesman told AAP.
Det-Insp Lynn said most of passengers taken to Frankston and Dandenong hospitals had minor injuries, mainly bruises and abrasions.
Metro Trains said train services on the Pakenham line between Dandenong and Cranbourne will be suspended, with buses to replace trains.
-AAP