Six passengers on the train died, as well as the driver of the car, New York Governor Andrew Cuomo told a news conference after visiting what he said was a devastating scene.
"This is a truly ugly and brutal sight. The third rail of the track came up from the explosion and went right through the (rail) car, it's a devastatingly ugly situation to see," he told reporters.
"It's actually amazing that not more people were hurt on that train," Cuomo said.
The Metropolitan Transportation Authority, known as MTA, said there were at least 12 serious injuries on the train after it hit a Jeep Cherokee that was stuck on the tracks at 6:30 p.m.
The MTA said 400 passengers from the eight-car train were taken to a rock-climbing gym for shelter. The average number of people on the train is 650, the MTA said.
Reuters witnesses said emergency workers were seen carrying someone off the train on a stretcher at 9:45 p.m. as dozens of fire and police vehicles flooded the area with lights.
Media reports said the driver of the car got out briefly to try to push it off the tracks, then got back into the car before it was hit by the train.
The train left Grand Central Terminal in midtown Manhattan at 5:44 p.m. and was headed north to Wassaic in southeast New York state.
The MTA said parts of the train line would remain closed on Wednesday morning. It was arranging for shuttle buses to fill the gap and warned of crowds and delays for thousands of commuters.
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