The crash happened at about 12:30 a.m. Thursday at Red River Street and East 10th Street. An Austin police officer tried to pull the man over at a gas station a few blocks away, but the driver took off. He turned the wrong way on a one-way street, turned right on Red River Street, and then slammed through the barricades set up for the festival.
The gray Honda Civic struck people gathered in front of an emptying nightclub called The Mohawk.
"We had a vehicle crash through some of our temporary South by Southwest barricades at 10th and Red River Streets," Lt. Brian Moon with the Austin Police Department told ABC News. "The driver continued to drive after crashing through the barricades and hit numerous pedestrians before the vehicle stopped."
The fatalities include a man from the Netherlands on a bicycle and a woman from Austin on a moped. The male victim was identified by his employer, Massive Music, as Steven Craenmehr, 35. The woman was identified as 27-year-old Jamie Ranae West of Austin.
Twenty-three other people, including West's husband, were injured, two of which remained in critical condition with life-threatening head injuries. Three patients were in serious condition.
The driver, identified as 21-year-old Rashad Owens of Killeen, Texas, eventually crashed into a parked van and tried to flee on foot, but an officer stopped him with a stun gun. Owens suffered minor injuries. He was taken into custody and faces two counts of capital murder and 23 counts of aggravated assault with a vehicle.
Records show Owens had a previous conviction in Alaska for drunken driving and one in Texas for criminal trespass.
South By Southwest, now in its 27th year, has grown from a small showcase for up-and-coming bands to an international extravaganza.
The festival issued a statement that expressed condolences for the victims and said some events would be relocated because of the incident. Concertgoers continued to stream in for another day of festivities, and by early afternoon, bass boomed through the area as bands played scheduled concerts nearby.
The Associated Press contributed to this report.