The person who died was a passenger in the car, while its driver and a second person are critically injured.
The bus was carrying children from a Gisborne school and crashed in Te Ngae Rd, in the semi-rural suburb of Ōwhata, about 9.15pm yesterday.
Fire and Emergency NZ said the people were trapped in the car and they had to use rescue gear to free them.
One of the critically injured was flown to Waikato Hospital, while the other was taken to Rotorua hospital by ambulance.
Kaiti School confirmed its students were involved. Three were taken to hospital, but have been discharged.
The group had been staying in Rotorua while they competed at a kapa haka competition in Tauranga.
"Following yesterday's absolutely impressive stand at Te Mana Kuratahi, Puhi Kaiti Kapa were involved in a bus vs car collision in Rotorua on their way to their accommodation from dinner last night," tumuaki Billie-Jean Potaka Ayton wrote on Facebook.
"Three students were admitted to hospital and have now been discharged. All students and kaiako are safe. Our hearts and aroha are with our team and their whanau."
Hato Hone St John said it sent five ambulances and two helicopters to the scene. Passengers on the bus sustained minor injuries, police said.
'Shaken but okay'
Kaiti School spokesperson Matai Smith, who is a broadcaster at local radio station Turanga FM, said the tamariki were shaken but okay.
His niece was on the bus and part of the kapa haka rōpū that had performed earlier in the day.
"After their performance ... gave her a big hug and told her I was so proud of her, and that she really, really did the whānau and the region proud.
"And then to wake up to news that my niece and her friends were involved in this horrific crash, it was just ... startling, I was full of angst this morning until I spoke to the mum and dad this morning who said no, she's well, and the kids are well."
That was a huge relief, he said, but the kids were shaken and many would need counselling. They were due to arrive back at the school after 2pm today.
"As you can imagine there are lots of staff, kaiako, tauira, friends, and also whānau that are eagerly anticipating their arrival," he said.
The haukāinga at the Rotorua marae they were staying at overnight conducted a karakia for them this morning before they left, and another would be held upon their return to the school, Smith said.
The group had represented Te Tai Rāwhiti at the competition with "such passion and vigour, and pride".
Inquiries into the circumstances of the crash are under way.
Declan Lescheid, who lives on the outskirts of Rotorua, said he was driving right behind the bus heading north when a car coming the other way appeared to drift across the median strip "head-long into the bus".
Both vehicles spun to the other side of the road, he said.
Lescheid slammed on his brakes, pulled over and called emergency services, while others nearby rushed towards the car to try and help the victims.
"The car was completely totalled, you could hear... crying and cries for help from the vehicle. The front was entirely caved in."
Lescheid said he was feeling okay after what he had witnessed.
"To think if I hadn't been paying attention I would have been in the back of the bus, is a bit wild."
A person living near the scene told RNZ he'd never heard anything like it and described the crash as "nasty".
The car and bus had been removed from the scene by this morning. All that remained was a smattering of broken glass and sawdust leftover from soaking up engine oil.
Go Bus confirmed one of its buses was involved. The vehicle as damaged but the driver safe.
"Emergency services attended the scene, and our team provided support to remaining passengers," chief operating officer Ben Barlow said.
"Arrangements were made for them to continue their journey safely."
Go Bus was cooperating with the police investigation, he said.
"This has been a distressing event for all involved. Our team continues to support one another during this difficult time."
Rotorua Māori ward councillor Trevor Maxwell said Te Ngae Rd is a busy one, with a lot of roadworks between Ōwhata and the airport.
However, the NZ Transport Agency said there were no roadworks or traffic management at the time of the crash.
"As with all serious crashes on the state highway network we will carry out a thorough investigation, including a review of the road and the roadside at the crash location," a spokesperson said.
There have been a number of fatal crashes on the road since 2013.
