A woman has died after a horror crash between a car and a tow truck on the Mornington Peninsula on Saturday afternoon.

Police said the collision occurred on Balnarring Road, near Gillett Road, in Tuerong about 3pm, causing both vehicles to run off the road and down an embankment.

A female sitting in the back seat of the car died at the scene while the female driver and a male front-seat passenger were both cut from the car.

They were both flown to hospital with life-threatening injuries.

The 39-year-old  truck driver from Lyndhurst is in police custody.

Anyone who witnessed the crash should contact Crime Stoppers on 1800 333 000 or submit a confidential report at www.crimestoppersvic.com.au.

The latest death takes this year's road toll to 23, one more than at the same time last year.