A police car overturned near Buckingham Palace and a 17-year-old boy was taken to hospital while officers chased a moped suspected in a "series of offences".
Scotland Yard said one of its cars crashed in the early hours of Saturday with a moped and two people riding it.
The teenager was arrested on suspicion of a number of motoring offences after being taken to hospital with leg injuries, the Metropolitan Police said.
The Independent Office for Police Conduct (IOPC) is now investigating after the collision in Grosvenor Place, outside the palace's grounds.
A Met spokeswoman said officers spotted a moped at 4.30am at nearby Hyde Park Corner.
"The vehicle, rider and pillion passenger matched the description of a moped believed to have been involved in a series of offences," she said.
Shortly after being pursued by a police car, she said the moped collided with a second police car travelling in the opposite direction at the junction with Chapel Street.
A second person is being hunted after fleeing the scene, police added.
An IOPC spokesman said: "An independent investigation has been launched following a collision between a moped and a marked police car in Westminster, London, this morning.
"A 17-year old boy has suffered serious leg injuries and been taken to hospital. A police vehicle overturned during the incident but no police officers have sustained injuries."