The Lake County Coroner's Office says two women and one man have died.
The nine-car, two-locomotive train was stopped while police investigated.
This is a familiar tragedy in northwest Indiana, a region heavily criss-crossed by railroad tracks.
Authorities say the 1998 Ford Taurus was pushed 175 feet by the train that at impact was moving at 59 miles per hour as it crossed Lake Street. Investigators say a video camera inside the lead engine confirmed the car's driver tried to cross the tracks after the lights were flashing and the gates dropped.
"The lights were fleshing, the gates dropped, the train was sounding the horn," said Cpl. Agnes Roberts, Gary Police Department.
The two young women and one young man in the Taurus were killed instantly. Familt=y members confirmed one, the car owner, was 21-year-old Nicole Thomas.
"For her to go around, I don't understand that. She was a good driver, a good person. I don't know if Nikki was the driver," said aunt Melonie Irving.
Family members were so upset that police used a Taser on one young man who had lost self-control, and they placed him, or another male family member, under arrest.
In the hours that reporters surveyed the scenes following the accident, at least three other cars rushed the tracks while the signals flashed after the gates had dropped.
Police repeated the warning they have made so many times in the past. They tell people: Do not try to beat the train. The few minutes you think you'll save do not compare to a lifetime.