As the horse whipped around in circles and the pitbull ran back and forth through its legs, the woman grew increasingly concerned, saying: "F**king hell. Oh my god."
The large animal appeared to kick out at the dog multiple times but did not make contact.
It appeared the dog ended up being captured by its owner, who managed to clasp it by the collar.
The witness posted the video to Facebook with a strong message for dog owners, telling users she saw "a pitbull off-lead with two owners unable to control it as it was intent on attacking the horse".
"After the incident the two owners walked off with no apology or details, and got into a car," she wrote.
"All dogs need to be on a lead and owners responsible when their dog attacks others."
The footage received more than 300 comments from locals shocked the aggressive dog had been off its lead, and more so that no one was injured by it or the horse.
"So many things that could have gone wrong there – helpers could have been kicked in the head trying to grab the dog. Made me feel sick watching that," one person wrote.
"I am sick to death of people who have their dogs off-lead who have no control over them. That poor horse, I hope he was not bitten. I hope the person who owns this dog gets a massive fine," another wrote.
While large areas of Centennial Park allow dogs to be off leads, they must be appropriately restrained while on the paths, including where the video was filmed.
The witness said the horse handler told her rangers had been made aware of the incident and provided footage. She said she believed "a fine will likely be issued" by rangers.
"It's the least that should happen given the 'what could have been' scenarios with so many children riders often in the park on weekends," the woman wrote.
A Centennial Parklands spokesperson confirmed the incident was being investigated.
"The incident involving a dog and horse at Centennial Parklands on Saturday 30 July 2022 has been reported to Centennial Parklands and is currently being investigated," they told news.com.au.
"Dogs are prohibited from being walked on the horse track and must be on-leash in all other areas inside Grand Drive.
"Fines may be issued pending the outcome of the investigation."