At least one of the people involved in the incident was taken to hospital with injuries, according to police.
A number of passers by were witness to the drama, that took place in the River under the Skeppsholmsbron bridge in central Stockholm around midday.
Several people on board rubber boats and jetskis were taking part in the procession when the accident occurred.
Two people ended up in the water near the Skeppsholmsbron bridge and had to be rescued after two of the rubber boats collided. One person received serious leg injuries from a boat propeller and was taken to hospital by ambulance.
The St. Lucia celebration traditionally consists of a procession following a young girl wearing a white dress with a wreath or candles in her hair.
The procession, a Swedish Christmas tradition usually held on December 13th as well as the advent Sunday closest to it, celebrates St. Lucy, a third-century Christian martyr.
Holiday festivities also saw Stockholm overtaken by a small army of Santas Sunday, as 1500 Father Christmas lookalikes participated in the three-kilometre Santa Run Stockholm, creating Christmassy marathon around starting and finishing points at Kungsträdgården.
A previous version of this article stated that the river collision involved two jetskis. This has now been corrected.