The incident took place when the ill-fated private bus was going to Kasauli from Nalagarh, they said.
Eyewitnesses said that the 41-seater bus was overloaded and carrying 61 passengers, mostly office-goers, when the mishap took place as the driver failed to negotiate a sharp curve near Jol village.
While two women were killed on the spot, the driver, identified as Lalit (30), died on the way to the hospital.
The injured were rushed to a hospital at Kasauli and 12 people with critical injuries were referred to PGI-Chandigarh, police said.