The train, from Glasgow Cental to Stranraer, struck the vehicle at the unmanned Little Genoch crossing near Dunragit, Dumfries and Galloway.
The 18-year-old driver was airlifted from the scene to the Southern General Hospital in Glasgow with serious injuries.
The teenager, from Newton Stewart, was the sole occupant of the Mitsubishi Shogun 4x4, which police said was extensively damaged in the crash.
The train driver and one passenger were treated for shock, but the other eight passengers are not thought to have been injured.
ScotRail said the two-carriage train involved was the 11.42am Glasgow Central to Stranraer service.
The site of the crash is only a few hundred yards from the main A75 Gretna to Stranraer trunk road.
Ambulance crews and two fire appliances attended the scene.
Dumfries and Galloway Constabulary said a joint investigation into the crash would be carried out with officers from British Transport Police.
A police spokesman said: "The male driver of the vehicle has been removed from the scene by an air ambulance with what are described as serious injuries.
"An investigation will be carried out into what happened."
Rail services to and from Stranraer were disrupted for the rest of the day, with no trains going in or out of the town.
Replacement transport was arranged.
The Rail Accident Investigation Branch said it would be carrying out preliminary checks at the site to determine whether a full investigation is necessary.