The accident, near the southern city of Graz, occurred after one of the trains apparently failed to observe a stop signal, said Helmut Wittmann, chairman of local train operator Steiermärkische Landesbahnen.
"Today we lost one of our colleagues," the Austria Press Agency (APA) quoted him as saying.
The driver had remained stuck inside his cabin after the crash and died at the scene after "fighting for his life", the Red Cross said.
The other driver and a 60-year-old woman suffered life-threatening injuries and were airlifted to hospital. Six other people, including two children, were seriously injured.
Regional authorities have opened an investigation into possible involuntary manslaughter, APA reported.
The accident happened around 10:20am near the train station of the village of Waldstein, 30 kilometres north of Graz.