Two men and one woman, named as John Provan, 64, Elizabeth Allan, 63, and 71-year-old John Leonard Stern, were killed in the second of two crashes at the Jim Clark Rally in the Scottish Borders.
The fatal accident happened about 4pm at Little Swinton, near Coldstream, on Saturday when a rally car came off the road and hit spectators.
The three were pronounced dead at the scene. Another man was taken to Edinburgh Royal Infirmary where he was said to be in a critical condition.
Colin Gracey has watched the rally for years from the same spot close to where the crash happened.
The 46-year-old teacher, who lives in nearby Swinton, was watching with his family, including three children.
He said: "We went down there, as we've been doing for about 17 years, to the same place we watch it from just up from the bridge.
"I think it was the seventh car coming through and it just veered very sharply after taking the bridge and it went right into the field, hitting the people who were stood there. It was shocking.
"I was there with my family, my three children, and we go to the same place every year and always watch it from there. It was very traumatic.
"It was like a bowling ball hitting skittles. It was awful, absolutely awful."
Mr Provan and Ms Allan were from Barrhead, while Mr Stern was from Bearsden.
Their bodies were only removed from the crash site yesterday.Superintendent Phil O'Kane of Police Scotland said officers had worked to "forensically and sympathetically" remove the deceased from the scene.
He added: "We secured the scene last night, it was fading light, and the practicalities meant body removal was not an option, so they were recovered over the course of today."
The rally car was still at the scene of the accident yesterday while two white tents were also erected on the road.
A forensic officer was seen filming at a junction close to where the crash took place.
A floral tribute was left beside a tree in tribute to those who died.
About 250 competitors had been taking part in the event, which is one of the largest in the UK, with thousands of spectators watching the action.
Two hours before the fatal crash another car in the rally left the road and hit a woman and four men near Crosshall Farm on the Eccles stage of the competition.
Three of the men were taken to Borders General Hospital but one was then moved to an intensive care unit in Edinburgh.
The remaining two spectators were treated for minor injuries.Superintendent O'Kane said he thought the rally organising committee "would have considered it was safe to move on to the next rally stage" after the first accident.
He added: "It's the nature of the event, a rally on open roads that the public have access to. Although safety barriers are put in place there are not stewarding positions along the whole route.
"It's a high-energy and a high-adrenaline sport and people want to take the best positions."
Other eyewitnesses to the fatal crash described it as "chaos".
In a statement the organisers of the Jim Clark Rally offered their "heartfelt condolences and sympathy" to all those affected by the "tragic events".
They added: "Our thoughts are especially with those who have lost family members and to the families of the injured spectators.
"All members of the organising team are in shock and are co-operating fully with Police Scotland to establish the facts."
The rally is named after Scottish Formula One driver Jim Clark, who grew up in the area and was killed in a motor-racing accident in Hockenheim in Germany in 1968 when he was 32.
Scotland's First Minister Alex Salmond spoke of the "desperately sad and difficult news from the Borders of the tragic circumstances that have occurred at the Jim Clark Rally".
He added: "My thoughts are with all of those involved and the families and loved ones of those who have lost their lives."