The accident happened shortly before midday when a bus smashed through a crash barrier and plunged into a ravine near Karon beach, on the island's southwest coast.
"Two women and one man were killed. Of the 17 injured, one is in a serious condition," Nisit Jansomwong, Phuket governor, told AFP by telephone.
"The bus was travelling uphill. We don't know the cause of the accident but police will have to question the Thai bus driver."
Photos on local media outlets showed a white bus resting midway down a steep incline. The roof at the back had been caved in.
A recent report by the World Health Organization said Thailand saw 38.1 road deaths per 100,000 people in 2010 -- behind only the Dominican Republic and the South Pacific island of Niue.
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