An elderly woman has been killed in a car crash at Nar Nar Goon, south-east of Melbourne.

Police say the woman, aged in her 80s, was heading west on Bald Hill Road about 1.30pm when the car she was driving collided with a car that pulled out from Five Mile Road.

The woman died at the scene, Victoria Police spokesman Adam West said.

The driver of the other car, a woman believed to be in her 60s, was flown to the Royal Melbourne Hospital in a serious but stable condition.

An Ambulance Victoria spokesman said the woman had a collapsed lung and a shoulder injury.

The death brings Victoria's provisional road toll to 169, compared to 163 for the same time last year.