According to police and media reports, with an "intent to murder", a 21-year-old man drove a small vehicle into Takeshita Street in Tokyo's fashion district of Harajuku at 10 minutes past midnight (15:10 GMT on Monday).
The driver, identified as Kazuhiro Kusakabe, was arrested at the scene on suspicion of arrested murder.
According to national broadcaster NHK, he told police he was acting in "retribution for the death penalty" without giving more precise details.
NHK footage showed a small box vehicle with a smashed front and paramedics carrying people on stretchers into ambulances.
"It is a shock. Really scary, isn't it?" one bystander told NHK.
Police immediately cordoned off the street, which was packed with people celebrating the arrival of 2019.
One college student suffered serious injuries during the attack and was undergoing surgery, the police spokesperson told AFP.
According to local media, Kusakabe hit a total of eight people and assaulted another on the street, which was closed to car traffic at the time as revellers crammed the area to celebrate the arrival of 2019.
Takeshita Street is packed with small shops and is considered the centre of youth culture and fashion in Japan, attracting tens of thousands of international tourists every day.
Unlike in other major cities, New Year in Tokyo is a relatively muted affair.