Mosgiel Fire Brigade station officer Howard Weir said the woman was crossing Gordon Rd, near Hartstonge Ave, about 10.40am when she was hit by the front-end loader.
"She ended up between the front wheels of the tractor and she has suffered some injuries because of that - a bit of bleeding from a knock to the head.''
The woman was taken to Dunedin Hospital with head, neck and shoulder injuries, but witnesses said she gave the thumbs-up gesture as she was being loaded into the ambulance.
"She was lucky to walk away from that. I don't think anyone would volunteer to walk in front of a moving tractor.''
The Serious Crash Unit has been called in to investigate.
Gordon Rd was closed to traffic between Factory Rd and Hartstonge Ave but reopened just after 1pm.