A witness told The Sun the carriage had gone up to “first floor height” when it crashed down to ground level.
They said: “There was one boy in it. He was shaking as paramedics stood around him.”
Other fair goers posted pictures of the derailed ride carriage on Facebook on Friday evening.
Angie Nokes said: “Accident at Caterham Funfair today – a cart on the ghost train smashed through the wall on the upper level and dropped to the ground, one teenage boy got out in time but another was taken to hospital with leg injuries.
“Not sure exactly what happened as only saw the aftermath, but some people said another cart smashed into the back of this cart forcing it off the track and through the wall”
Another witness, Rob Holmes, said he could not believe what he saw.
He added: “We heard people screaming from the side of the ride. The ghost cart SMASHED through the side of the ride and threw two boys through the air.
“They were laying on the ground hurt, but we called them a ambulance [sic].”
A South East Coast Ambulance Service spokesman said they were called at 6.41pm on Friday and sent one ambulance to the scene.
Paramedics treated a 14-year-old boy for serious leg injuries before he was taken by ambulance to East Surrey Hospital.
A Health and Safety Executive spokesman said they had been informed about the incident by the emergency services.