Witnesses described seeing ambulances attending, along with an air ambulance which landed on the nearby beach.
A white sheet was held around the scene while the injured person received treatment from the emergency services.
The event sees home-made go-karts navigate a course down Cliff Hill in the seaside town.
Prizes are awarded for speed and creativity, according to the website of organiser, external Penarth town council.
The downhill derby formed part of the Penarth Summer Festival, with other events due to take place later, such as musical performances, also called off.
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