The crash occurred shortly after 2 p.m. on the 600 block of N. Doheny Drive near Santa Monica Boulevard.
Witnesses said Arquette was driving behind a car that stopped suddenly. He swerved to the left to avoid hitting the vehicle and veered into oncoming traffic, slamming head-on into a Jeep Liberty.
The 39-year-old actor admitted on Twitter that he was not wearing a seat belt. His airbag deployed but he hit the windshield of his silver Cadillac.
Within seconds neighbors and passerbys rushed to the scene.
"Some gentleman helped him out of the car and he was asking for some water. But after that, he was on the ground, laying down on the ground and the paramedics got here and were attending to him," said witness Sinai Lahijani.
The Good Samaritan, who gave his name as only James, spoke exclusively to Eyewitness News.
"I was just asking if he was alright and he really didn't respond. Then I noticed who it was and I called him by his first name a couple times and he sort of came to after a few seconds. He had a little blood on his, I don't know if it was his forehead or his nose," said James.
He stayed with Arquette until the paramedics arrived at the scene. He said the actor was clearly injured, but he was aware he had been in a crash and his first concern was for the female driver of the Jeep.
Video posted on the celebrity website TMZ.com showed paramedics and firefighters putting a man that appeared to be Arquette on a stretcher and lifting him into an ambulance.
Arquette was transported to Cedars-Sinai Medical Center in stable condition, according to an L.A. County Fire official. Publicist Cindy Guagenti said the actor was "OK."
Shortly after the collision, Arquette tweeted: "I got into a car accident but I'm fine. Luckily I have dragon's blood running through my veins. Haha Thank you for all your concern" and "Remember to wear your seltbelt - wish I was."
On "The Oprah Winfrey Show" last week, Arquette discussed his separation from his wife, "Cougar Town" actress Courteney Cox, after 11 years of marriage, as well as a recent intervention orchestrated by Cox and his sister, Patricia Arquette. The actor has battled alcohol addiction and recently completed 28 days in a rehab facility. He told Winfrey he was sober for the first time in years.