The 310ft ferry, carrying about 1,500 passengers, crashed into the enormous wooden pilings on the Staten Island end of its run from Manhattan, reducing the front of the boat to a mass of shattered planks, broken glass and twisted steel.
Some commuters were crushed in the 22-year-old ferry, others were trapped in piles of debris aboard after glass shattered and metal was contorted by the force of the crash, which left a huge hole in the boat's flank.
A number of passengers were thrown overboard by the force of the crash, or jumped in desperation into the cold, choppy, windswept water.
Witnesses said that victims screamed and dived for cover as metal crunched into wood just before the start of the evening rush hour, tearing girders, splintering planks and ripping into the three-level, bright-orange vessel, which has a capacity of 6,000 passengers.
Unofficial reports said the death toll could be as high as 14, but this was later discounted as confusion caused by bodies being counted twice. But, given the extensive injuries to victims, the confirmed death toll was expected to rise.
The captain of the ferry, the Andrew Barberi, fled and was tracked down by police at his Staten Island home, said a high-ranking police source.
Later, New York's mayor, Michael Bloomberg, said the ferry's crew would be interviewed and tested for drugs and alcohol. He had earlier boarded the ferry to assess the damage himself.
Firefighters arriving at the scene searched through the wreckage while coastguard divers searched the water for victims - they pulled at least two to safety.
Mr Bloomberg, who was rushed to the scene from a Yankees baseball game on news of the tragedy, said it was New York's worst mass-transit accident in at least a generation.
"It's a terrible tragedy, people who were on the way home, all of a sudden, taken from us," he said at a dockside press conference.
"People who were sitting [aboard] as the ferry docked were hit by the pilings that came through the side of the boat," the mayor said. The pilings hit on the ferry's main deck, crashing into the windows that ordinarily afford a postcard view of the Statue of Liberty.
"Everybody's screaming. The pilings protruded through the right hand side of the boat. Everybody jumped for their lives," a passenger, Bob Carroll, told local NY1 television news. "People were piling up, scrambling over each other."
The cause of the accident was not immediately known. City officials say high winds may have been a factor. Winds at New York's La Guardia airport were measured at 31mph, with gusts up to 43mph, around the time of the crash.
The national transportation safety board convened an accident investigation team, which will look at the weather, among other factors leading up to the accident.
"There were numerous injuries like fractures and lacerations," said a fire department spokeswoman. "There were a couple of people with amputations - legs and arms."
The Staten Island ferry, a free commuter service to and from Lower Manhattan, was arriving at St George's terminal in Staten Island at about 3.20pm when the accident happened.
The five-mile (eight-kilometre) trip between Staten Island and Manhattan normally takes 25 minutes.
A ride on the Staten Island ferry is one of the city's most beloved attractions to New Yorkers and tourists alike, giving visitors a Hollywood-style view of lower Manhattan's skyscrapers.
The seven boats that make up the Staten Island ferry fleet carry 70,000 commuters a day between Staten Island and lower Manhattan. The boats make 104 daily trips between the two boroughs. The Andrew Barberi travels at about 18mph (30kph).
Service was suspended on all Staten Island ferries after the accident.
Steamboat ferries began operating between Manhattan and Staten Island in 1817. A railroad company ran the ferry from 1884 until 1905, when it was taken over by the city. It is now run by the city transportation department.
In 1997, a car plunged off the ferry as it was docking in Staten Island, causing minor injuries to the driver and a deckhand who was knocked overboard by the car.
A boiler explosion aboard a ferry killed 104 passengers as it was preparing to leave lower Manhattan for Staten Island in 1871.
In the summer of 1986, a man wielding a sword attacked riders on a ferry, killing two and injuring nine others before he was subdued by a retired police officer.