The driver, identified only as a black male, fled from police and was subdued by an officer using a stun gun after the incident near the SXSW festival. He will face two counts of capital murder and 23 counts of aggravated assault with a vehicle, police said.
The two people killed were a Texas woman who was riding on a moped and a Dutch man who was riding a bicycle, Austin Police Chief Art Acevedo told a news conference.
"This is an individual that showed no regard for the human beings that he plowed into in his attempt to get away," Acevedo said of the suspect, whose name was to be released when he was formally charged later on Thursday,
Acevedo said police had taken blood samples from the man and have video of the incident from a police dashboard camera.
The suspect was asked to pull over at a sobriety check point and instead sped away from a police car. He smashed through a police barricade and then plowed down people, some of them lined up outside a nightclub, over a span of two blocks.
Witnesses said victims were flying in the air after being struck.
The suspect then tried to flee on foot but was subdued by an officer with the stun gun.
Emergency medical teams, on standby for the festival, responded quickly and the most severely injured victims were transported to nearby hospitals, officials said.
"All of our critical patients were off the scene within 15 minutes of the time we received the first call," James Shamard, chief of staff for Travis County EMS, told the news conference.
Five of the victims were initially in critical condition and two remained in that condition after suffering head injuries, medical officials said. Five other victims were initially listed as being in serious condition.
The suspect had minor injuries and was treated at the same hospital as many of the victims. He was then taken into police custody, hospital officials said.
SXSW, running from March 7 to 16, began as a music event in 1987. It features technology conferences, a film festival and music shows that draw tens of thousands of people to the Texas capital annually.
Many roads in downtown Austin are closed to traffic each night of the event as thousands take to restaurants, bars, clubs and movie theaters. Police set up numerous checkpoints in the area to look for people suspected of driving under the influence.
Roland Swenson, the festival's managing director, said the event would continue.
"As much as we would just like to go home and spend time absorbing the shock of this horrific event, we feel that our best use is to continue to operate today," he said.
