The incident, involving a Vauxhall Astra, happened on Sunday at 2145 BST at Sandhill, on the city's Quayside.
The car, in which Gascoigne was a passenger, is thought to have left the road and hit a nearby signpost.
A 36-year-old woman has been arrested on suspicion of drink-driving.
A spokesperson for Newcastle General Hospital, where the former footballer and another man are being treated, described the condition of the pair as "serious but not life-threatening".
1990 World Cup
The female driver of the car was also taken to the hospital but has since been discharged.
North East Ambulance Service confirmed that a passer-by had called them to the incident on Sunday evening.
Four ambulances were sent to assist the driver and three passengers.
The scene where the dark blue Astra crashed is next to Newcastle's Guildhall and close to the Tyne Bridge.
It was cordoned off by police on Monday.
A former player with Newcastle United, Tottenham Hotspur, Lazio, Glasgow Rangers and Middlesbrough, Gascoigne was a star of England's 1990 World Cup team in Italy.
He tried his hand at management at Kettering Town in 2005, but was sacked after 39 days.
The 43-year-old, of Jesmond Park, Newcastle, has faced a long battle with alcohol and drugs.
Source: BBC News
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