Police say the hot air balloon clipped trees and crash landed just after 8am.
Vern, who was on board the balloon, told Nine News Perth: “We tried to land once, the pilot seemed to attempt to land once and couldn’t make it.
“We went up again, travelled about another kilometre and half, then it came down and it was quite rough.
“Someone shouted ‘the pilot’s fallen out’, it lifted a little bit more, then crashed into a tree and it came to a stop and everybody got out.
“Luckily all the passengers were okay, but the pilot was quite seriously injured.”
The pilot, a man in his 40s, sustained head injuries and was taken to Royal Perth Hospital by a rescue helicopter.
An RPH spokeswoman said the pilot was in a serious but stable condition.
Vern said among the passengers were two State Emergency Service volunteers who tended to the pilot.
“The pilot fell forward and then the basket went over the top of him,” he said.
“The first impact was quite severe, but we were told to brace, so we were all holding on.
“We had landed right next to a house or farm and they called the ambulance — we had no idea where we were.”
As many as 16 passengers were on board at the time but it is believed they were not injured in the crash.
Police will investigate the crash in conjunction with aviation safety officers.