District Police Chief, Supt Shamsudin Mat, said the three were passengers in the Perodua Alza, namely Hamsiah Hassan, 45, her 14-year-old daughter Hasimah Shahirah and the driver of Proton Iswara, who is yet to be identified.
Shamsudin said the Perodua Alza driver, his five daughters, the Proton Iswara passenger and her baby suffered injuries.
It was learnt that the Perodua Alza was heading towards Tawau from Sandakan, while the Proton Iswara in the opposite direction when the tragedy occurred at about 3.45pm.
"Preliminary investigations found that the Iswara was overtaking a vehicle and crashed with the Perodua Alza in the opposite direction," he said.
All the victims had been sent to District Hospital for treatment, while the deceased were sent for post mortem.