The Zumur swing ride at Norwalk Oyster Festival apparently lost power while the riders were airborne, according to Norwalk police.
The sudden loss of momentum caused seats on the ride, in which people sit in open chairs suspended by cables from metal arms, to slam into each other, throwing the children 15ft to the ground.
One of the children was hospitalised, but none of the injuries sustained was believed to be serious, Norwalk Police Chief Tom Kulhawik said.
Some of the children's parents were watching as the ride malfunctioned.
A carnival swing ride accident sends children to the hospital. I'm in Norwalk CT pic.twitter.com/CpWywHoJyF
— Lucy Yang (@LucyYang7) September 9, 2013
All carnival rides at the festival were shut down for an inspection by the state fire marshall's office and state police but later reopened.
The Norwalk Seaport Association, which sponsors the festival, said the organisation was "co-operating fully with the investigating authorities".
"Our first and only concern is for the wellbeing of those involved and their families," it said in a statement.
Stewart Amusement of Trumbull, Connecticut, which operates the ride, posted a message on its website saying a preliminary inquiry into the accident found the Zumur ride "suffered a mechanical malfunction".
"We are continuing to co-operate with authorities as they investigate into the root cause of the accident," it added.
Those injured were treated in hospitals and then released.