The accident happened after a competitor lost control as the car travelled along a road in Berwickshire yesterday afternoon about 4pm.
The spectator, who was thought to have been seriously injured, was watching cars taking part in the Jim Clark Rally several miles from the town of Duns.
Last night there were unconfirmed reports that the vehicle had hit a telegraph pole before colliding with the spectator.
The penultimate stage of the race was cancelled as the man was airlifted to the Edinburgh Royal Infirmary. His condition was unknown last night.
Drivers taking part in the rally were forced to turn round after roads were shut to allow the victim to receive medical attention.
They were then redirected onto the final part of the race.
Jim Clark Rally said last night: "The penultimate stage of the Jim Clark Reivers Rally was cancelled following an incident in which a competing car collided with a spectator.
"The spectator was injured. With the stage stopped he was subsequently airlifted to hospital in Edinburgh."
The Reivers Rally event, held as part of the two-day Jim Clark Rally, involved more than 100 cars on the closed public roads around Berwickshire over the weekend.
Thousands of rally enthusiasts gathered on bends throughout the race which sees cars cover 166 miles.