The woman, 43, was taken to Royal Prince Alfred Hospital where she was undergoing tests to determine whether her toe could be reattached.

Police said the woman was a pillion passenger on the motorcycle, which was being driven by a 34-year-old woman, when the motorcycle and taxi crashed at the intersection of Pitt and George streets in Haymarket just before 10pm on Thursday.

Witnesses told police the motorcycle was travelling south behind the taxi on George Street when the taxi stopped suddenly at the intersection, and the motorcycle crashed into the back of it.

The two women on the motorcycle fell heavily on to the road and the woman's big toe was cut off. Police could not say what footwear the woman was wearing at the time.

Paramedics recovered the toe at the crash scene and took the woman to hospital.

"The woman is undergoing tests at Royal Prince Alfred Hospital to determine if it can be surgically reattached," police said.

The woman driving the motorcycle was also taken to hospital, but her injuries were not believed to be serious. She will undergo mandatory blood testing, police said.

The 62-year-old taxi driver was not injured, and returned a negative breath test at the scene, police said.

Officers from the Metropolitan Crash Investigation Unit have launched an investigation, and have urged anyone who saw the crash to contact Crime Stoppers on 1800 333 000.