A video from the event showed the event unfolding at the Australian Top Fuel Championship, a high-profile new drag racing tournament held over two days.
As a commentator relays the day's action, an explosion occurs in one of the vehicles behind him, seemingly with no warning.
The car explodes as a presenter talks.
At the time there looked to be at least nine people in close proximity to the racing car, which was part of the Jim Read racing team.
The presenter instinctively ducked down mid broadcast and simply said "whoa" as the fireball erupted. Screams could be heard from the stand.
When the camera spun back to the car, a man clad in a yellow vest could be seen lying on the ground as people swarmed around to help him.
On Facebook, later on Saturday, Sydney Dragway posted a comment about the event.
"Earlier today, there was a start line incident involving one of the teams competing," it stated.
"A full investigation is underway into the cause of the incident in question in conjunction with the organisers of the Australian Top Fuel Championship and the sanctioning body at Sydney Dragway, International Hot Rod Association Australia.
"Our thoughts are with the team members involved and hope to see them back at the racetrack soon."
Commenting on social media, one person said it was "loud, like a grenade".
"I was 50 metres away and the concussion shook me."
Others said it was a "massive explosion" and "terrifying".
"I was behind the barrier, next to it," spectator Di said.
