Around 50 people in Winsen, near Hamburg, were going between houses in traditional costume and singing on Monday afternoon, as they do each year in the village during the Karneval season.
Members of the “Faslam brothers” Karneval group beckoned to a car, which was reportedly speeding in a 30-kilometre-an-hour zone, to tell it to slow down.
But the driver reacted badly and instead of slowing down he hit the Skoda Octavia's acceleration and lurched forward into the fancy-dress clad group.
He smashed into the wooden wagon they were pulling, which flew into the air and crashed down onto two men aged 47 and 58.
One was was flown to hospital in a rescue helicopter and the other was taken by ambulance.
A police spokesman said that the driver appeared to be aggressive and confused, and is being assessed in a psychiatric hospital in the Lower Saxony area. He faces charges of attempted homicide.